Hindustan Unilever has been slapped with a tax notice of Rs 962.75 crore, by the Income Tax Department as per the company's disclosure in its exchange filings.
The tax notice reportedly includes an interest of Rs 329.33 crore.
The tax demand arises from the company's non-deduction of Tax Deducted at Source (TDS) related to a remittance of Rs 3,045 crore made for the acquisition of India Health Food Drink's (HFD) Intellectual property rights (IPR) from the GlaxoSmithKline (GSK) Group.
In response to the tax demand, the FMCG major stated that it would appeal the order and take all necessary legal actions as per Indian law. It stated that the company has indemnification rights, which help it recover the tax demand raised by the Income Tax Department from relevant parties and would take necessary steps to enforce this right.
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"The Company has 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," HUL said.
Hindustan Unilever completed the merger with GlaxoSmithKline Consumer Healthcare Limited (GSKCH), following necessary approvals in 2020.
It acquired the Horlicks brand for India from GSK for Rs 3,045 crore. Boost, Maltova and Viva, which are GSKCH's other brands also joined HUL's portfolio through the merger.
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Hindustan Unilever achieved a 3 per cent year-on-year (YOY) jump in net profit at Rs 2,538 crore for Q1 of FY25, in line with the street estimate of Rs 2,541 crore.
HUL's revenue from operations for the reporter quarter stood at Rs 15,166 crore, rising 2 per cent YOY as against Rs 14,931 crore recorded in the 2023 June quarter.
Its shares closed at Rs 2820.70 a piece on August 26 on BSE.
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