Hindustan Unilever (HUL) said 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 acquisition of India Health Food Drink (HFD) Intellectual Property Rights (IPR) from GlaxoSmithKline ‘GSK’ Group entities.
The demand was raised by the office of the Deputy Commissioner of Income Tax, Mumbai, through a letter on 23 August 2024.
HUL stated that the demand will not have any significant financial implications at this stage.
“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,” said the company.
Further, the company has an indemnification right to recover the demand raised by the Income Tax department and will undertake necessary steps in furtherance of the same, it added.
Hindustan Unilever is India's largest fast moving consumer goods company.
The FMCG major reported 2.67% rise in standalone net profit to Rs 2,538 crore in Q1 FY25 as compared to Rs 2,472 crore recorded in Q1 FY24. Revenue from operations was at Rs 15,166 crore in Q1 FY25, up 1.57% from Rs 14,931 crore reported in the same period a year ago.
Shares of Hindustan Unilever shed 0.74% to Rs 2,799.75 on the BSE.