look news india
The Income Tax Department has accused Hinduja Global Solutions (HGS) of tax evasion of about Rs 2,500 crore. These allegations against Hinduja Global Solutions have been outlined in a recent internal report after a nine-month investigation. The report said that tax officials cited the General Anti-Avoidance Rule and claimed that HGS merged with a loss-making company after selling its profitable healthcare division to avoid paying taxes.
The report quoted a spokesperson for Hinduja Global Solutions Ltd as saying that the said M&A transaction was picked up in last year's IT survey and appropriate replies and documents were provided, supported by legal and tax expert opinion. It was reported that no alleged demand notice has been received since then. In our view, the M&A process was in accordance with tax law. If tax authorities send notices, they will be contested legally as per existing procedures and laws.
Hinduja Global Solutions Ltd sold its healthcare division to Beten BV, a subsidiary of Baring Private Equity Asia. Following the sale, the company merged its digital media and communications business, NXT Digital, with Hinduja Global Solutions. According to the findings of the Income Tax Department, NXT Digital was a loss-making entity. The merger was done only to avoid tax and capital gains, the report said. The investigation has been completed. The merger has no purpose other than tax avoidance. As a result, a demand of Rs 1,500 crore has been made under GAAR and an additional Rs 1,000 crore for capital gains. As part of the investigation, the IT department conducted a survey process at the company's premises in November 2023. Hinduja Global Solutions had said at the time that the company had no additional information to provide at this stage. The company will update the stock exchanges if the matter progresses and any material, information is found in this regard.