Income Tax Department sends tax notice of Rs 962 crore to HUL, case related to acquisition of Horlicks
Income Tax: HUL has acquired the Horlicks brand from GSK for Rs 3,045 crore. Through this merger, other GSKCH brands like Boost, Maltova, and Viva also joined HUL's portfolio. The Income Tax Department has issued a tax notice to HUL in a case related to this transaction.
Hindustan Unilever has got a tax notice of Rs 962.75 crore from the Income Tax Department. This also includes interest of Rs 329.33 crore. The FMCG company informed the exchanges on Monday. This notice is related to the non-deduction of tax at source (TDS) of Rs 3,045 crore spent for the acquisition of intellectual property rights of India Health Food Drink (HFD) from GlaxoSmithKline group.
HUL had acquired the Horlicks brand from GSK for an estimated Rs 3,045 crore. It has also added other brands including Boost, Maltova, and Viva of the GSKCH to its portfolio. However, following massive demand it seems that the firm has ruled out any major financial implications at this stage.
HUL said, "The company has a strong case for non-withholding of tax, based on available judicial precedents which have held that the location of intangible assets is linked to the location of the owner of the intangible assets and hence, income arising from the sale of such intangible assets is not subject to tax in India."
In response to the demand, the FMCG major plans to appeal against the order, taking all necessary legal action as per Indian law.
Further, HUL said that it is entitled to an indemnity wherein it will recover the tax demand created by the I-T department from concerned parties. The same has to be further pursued by the company. Shares of HUL closed at Rs 2820.70 on BSE on August 26. In 2020, after completing all the required approvals, HUL completed the scheme of merger with GlaxoSmithKline Consumer Healthcare Ltd. The consumer goods giant has reported a 3% YoY rise in net profit to Rs 2,538 crore for Q1 FY 2025. HUL's revenue from operations for the reported quarter stood at Rs 15,166 crore, up 2 percent as against Rs 14,931 crore recorded in the June 2023 quarter.
