Leading FMCG maker HUL said that it has received a demand notice of Rs 962.75 crore from the Income Tax Department and will go in for an appeal against the order.
The notice relates to the non-deduction of TDS on payment of Rs 3,045 crore to GlaxoSmithKline Consumer Healthcare (GSKCH) for the acquisition of Intellectual Property Rights of the Health Foods Drinks (HFD) business consisting of brands such as Horlicks, Boost, Maltova, and Viva, according to a recent exchange filing.
A demand of “Rs 962.75 crore (including interest of Rs 329.33 crore) has been raised on the company on account of non-deduction of TDS as per provisions of Income Tax Act, 1961 while making remittance of Rs 3,045 crore (EUR 375.6 million) for payment towards the acquisition of India HFD IPR from GlaxoSmithKline ‘GSK’ Group entities,” it said.
According to HUL, the said demand order is “appealable” and it will be taking “necessary actions” in accordance with the law prevailing in India.
HUL said it believes it “has a strong case on merits on tax not withheld” on the basis of available judicial precedents, which have held that the situs of an intangible asset is linked to the situs of the owner of the intangible asset and hence, income arising on sale of such intangible assets are not subject to tax in India.
The demand notice was raised by the Deputy Commissioner of Income Tax, Int Tax Circle 2, Mumbai and received by the company on August 23, 2024.
“There should not be any significant financial implications at this stage,” HUL said.
The FMCG major had completed the merger of GSKCH in 2020 following a Rs 31,700 crore mega deal. As per the deal, it had additionally paid Rs 3,045 crore to acquire GSKCH’s brands such as Horlicks, Boost, and Maltova.
In January this year, HUL had received demands for GST (Goods and Services Tax) and penalties totalling Rs 447.5 crore from the authorities.
In FY24, HUL’s revenue was at Rs 60,469 crore.
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