HUL slapped with Rs 962-crore tax demand for Rs 3,000-crore GSK deal

Hindustan Unilever has received a tax notice of Rs 962.75 crore, including an interest of Rs 329.33 crore.

In an exchange filing, the FMCG announced that the demand has been issued for the non-deduction of tax deducted at source for a remittance of Rs 3,045 crore for the payment towards the purchase of India Health Food Drink (HFD) Intellectual Property Rights (IPR) from GlaxoSmithKline ‘GSK’ Group entities.

The company also noted that the demand will not have any significant financial implications at this stage.

The statement said, "The company has a strong case on merits on tax not withheld, basis 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 company mentioned appealing the IT department's order. It has an indemnification right to recover the demand raised by the tax department and will undertake necessary steps in furtherance of the same.

HUL completed the merger of GSK Consumer Healthcare with itself, and acquired Horlicks brand for India from GSK for Rs 3,045 crore, in April 2020. With the same, HUL took ownership of the brands including Boost, Maltova and Viva.