Hinduja Group Faces Tax Evasion Allegations
The Income Tax department is investigating allegations that Hinduja Global Solutions (HGS), a subsidiary of the Hinduja Group, evaded tax liabilities of approximately Rs 2,700 crore. This alleged evasion is linked to the sale of HGS's healthcare services business to Betaine BV, a Netherlands-based entity, and the subsequent merger of NXTDigital, Hinduja Group's digital media and communication business, into HGS.
While a formal tax notice is yet to be issued, Income Tax department sources confirmed the investigation to Business Today. The sources claim that the alleged tax evasion on capital gains, estimated at around Rs 1,000 crore, was detected in the deal. Following these reports, the National Stock Exchange and the Bombay Stock Exchange sought clarifications from HGS.
HGS denied receiving any demand notices, stating that queries were raised during a previous IT survey regarding the M&A transaction and that appropriate responses and documents were provided, supported by legal and tax expert opinions. They added that they haven't received any alleged demand notices since then and strongly believe the M&A process was compliant with tax laws. Should notices be issued, they will be legally contested.
An additional allegation involves the General Anti-Avoidance Rule (GAAR) under the Income Tax Act. The conglomerate is being investigated for the tax implications arising from the merger of HGS with NXTDigital, a loss-making entity. The tax authorities allege that this transaction was structured to avoid potential taxes of approximately Rs 1,700 crore. The application of GAAR-related liabilities has been a contentious issue in India.
The Income Tax department is currently examining evidence gathered during a survey conducted in November 2023 at HGS offices in Mumbai and other cities.
The Hinduja Group owns various companies, including Hinduja Leyland Finance, Hinduja Bank (Switzerland), Ashok Leyland, Ashok Leyland Foundries, Switch Mobility, PD Hinduja National Hospital and Medical Research Centre, Hinduja Tech Limited, NXTDigital, and Hinduja Realty Ventures Limited.