HUL Hit with ₹962 Crore Tax Bomb Over TDS Dispute in ₹3,045 Crore GlaxoSmithKline Deal – What It Means for Investors

Hindustan Unilever (HUL) has been served with a tax notice amounting to ₹962.75 crore by the Income Tax Department. This figure includes ₹329.33 crore in interest.

Acquisition of Horlicks

The notice relates to HUL’s acquisition of intellectual property rights (IPR) for India Health Food Drink (HFD) from GlaxoSmithKline (GSK) Group for ₹3,045 crore. The acquisition included the Horlicks brand, along with other GSK brands like Boost, Maltova, and Viva.

TDS Non-Deduction Dispute

The tax demand stems from HUL’s alleged failure to deduct Tax Deducted at Source (TDS) on the ₹3,045 crore payment made for the Horlicks brand in India. HUL, however, believes that the tax was not required based on existing judicial precedents.

Legal Response

HUL has stated that it plans to challenge the tax order through the legal system. The company also mentioned that it has indemnification rights, allowing it to recover the tax demand from the relevant parties involved in the deal.

Stock Performance and Financial Update

HUL’s shares closed at ₹2,820.70 on the BSE on August 26. The company reported a 3% year-on-year increase in net profit for Q1 FY25, amounting to ₹2,538 crore. Revenue for the quarter was ₹15,166 crore, reflecting a 2% year-on-year growth.