The Income Tax Department has accused Hinduja Global Solutions (HGS) of tax evasion amounting to approximately Rs 2,500 crore, based on a report from The Economic Times.
A recent internal report, resulting from a nine-month investigation, details the allegations against HGS. Tax officials, invoking the General Anti-Avoidance Rule, allege that HGS merged with a loss-making entity after selling its profitable healthcare division to evade tax obligations.
A spokesperson for Hinduja Global Solutions Ltd stated, “Regarding the mentioned M&A transaction, inquiries were made during last year’s IT survey, and appropriate responses along with supporting documents were provided, including views from legal and tax experts. Since then, we have not received any alleged demand notices.”
The spokesperson further emphasized, “We firmly believe that the M&A process complies with tax legislation. Should the tax authorities issue notices, we will legally challenge them in accordance with existing procedures and laws.”
Tax Evasion Allegations Following Merger
Hinduja Global Solutions Ltd divested its healthcare services division to Betaine BV, a subsidiary of Baring Private Equity Asia (BPEA). Following this transaction, HGS merged its digital media and communication arm, NXT Digital (NDL), with Hinduja Global Solutions (HGSL).
The Income Tax Department has found that NXT Digital was operating at a loss, and the merger was allegedly orchestrated solely to sidestep taxes and avoid capital gains taxes.
According to a senior official, the investigation has concluded, determining that the merger’s intent was purely to avoid tax liabilities. Consequently, a demand of Rs 1,500 crore has been raised under GAAR, alongside an additional Rs 1,000 crore for capital gains tax.
Hinduja Group Under Tax Investigation
As part of the investigation, the Income Tax Department conducted a survey at the company’s premises in November 2023. During this period, Hinduja Global Solutions remarked, “The company has no further information to disclose at this moment. We will keep the Stock Exchanges updated should the situation evolve or if any significant information or events arise.”
Hinduja Global Solutions is a component of the Hinduja Group, which also encompasses various entities, including IndusInd Bank, Hinduja Leyland Finance, Hinduja Bank (Switzerland), Ashok Leyland, Hinduja Tech Limited, and PD Hinduja National Hospital and Medical Research Centre, among others.