Hinduja Group company in ₹2,700-crore tax dispute, firm denies getting any notice

The Income Tax department is examining allegations that a Hinduja Group company avoided tax liabilities of around Rs 2,700 crore. This alleged avoidance is linked to a sale transaction of group company Hinduja Global Solutions (HGS) to another subsidiary NXTDigital.

Hinduja Global Solutions sold its healthcare services business to wholly-owned subsidiaries of Betaine BV, a specially incorporated Netherlands-based entity. Hinduja Group subsequently merged NXTDigital, its digital media and communication business, into HGS.

Though a formal tax notice is yet to be sent to the Hinduja Group, Income Tax department sources confirmed the probe to Business Today. According to the sources, the alleged tax evasion on capital gains pegged at around Rs 1,000 crore was detected in the deal. Following reports, the National Stock Exchange and the Bombay Stock Exchange today sought clarifications from HGS on this matter.

When contacted, the Hinduja Global Solutions denied having received any demand notices. The company said, “queries were raised in last year's IT survey concerning the said M&A transaction, and suitable answers and documents were furnished, backed by opinions of legal and tax experts”, adding that, “since then, we haven't received any such alleged demand notices.” HGS also said, “we strongly believe that the M&A process was in line with the tax laws. If the tax authorities send notices, they would be legally contested as per prevailing procedures and laws.”

An additional allegation involves the General Anti-Avoidance Rule (GAAR) under Chapter X-A of the Income Tax Act. Under this rule, the conglomerate is facing a probe on the tax implications arising out of the merger of HGS with NXTDigital, a loss-making entity. The tax authorities allege that this transaction was structured to avoid potential taxes to a tune of Rs 1,700 crore. It may be noted that application of GAAR related liabilities has been a contentious issue in the past in India. .

The Income Tax department is examining the evidence gathered during a survey in November 2023 at Hinduja Global Solutions in Mumbai and several other cities.

The Hinduja Group owns Hinduja Leyland Finance, Hinduja Bank (Switzerland), Ashok Leyland, Ashok Leyland Foundries or Hinduja Foundries, Switch Mobility, PD Hinduja National Hospital and Medical Research Centre, Hinduja Tech Limited, NXTDigital, and Hinduja Realty Ventures Limited among others.