HUL’s ₹1,560 Crore Income Tax Demand

The income tax demand has been raised on Hindustan Unilever Limited, one of India’s most stable and closely tracked FMCG giants.

When a company of this scale receives a four-figure crore tax demand, the issue is less about liquidity and more about tax interpretation and precedent.

What exactly triggered the ₹1,560 crore demand

The tax department has issued a demand of ₹1,559.69 crore for FY 2021–22 (AY 2022–23).
This is not a case of unreported income or hidden cash flows. The additions stem from:

• Transfer pricing adjustments on payments made to group entities
• Corporate tax disallowances, largely related to depreciation claims

In simple terms, the dispute is about how much should have been paid, not whether something was concealed.

The timing and regulatory trail

The assessment order was passed in early January 2026, with the company receiving formal communication on 7 January 2026 and disclosing it to stock exchanges a day later.
The order was issued under Section 143(3) read with Section 144C(13), followed by a demand notice under Section 156 of the Income Tax Act.

Where the assessment originated

The proceedings were handled by the Assistant Commissioner of Income Tax, Central Circle 5(2), Mumbai — a jurisdiction typically associated with high-value and complex assessments, especially involving multinational structures and transfer pricing reviews.

Why this isn’t a one-off issue

What makes this case particularly instructive is that similar adjustments were made in the previous year as well.
This signals:

• A continuing valuation disagreement
• A consistent stance by the tax department
• An unresolved interpretational gap rather than a new compliance failure

For large corporates, this is a reminder that transfer pricing disputes are often multi-year battles, not single-order events.

How the company is responding — and why markets stayed calm

Despite the size of the demand, HUL has clearly stated that:

• There is no material impact on financials or operations
• No penalties or sanctions have been imposed
• No adverse compliance findings have been recorded

The company will pursue its statutory appeal remedies within the permitted timeline.
The market response reflects this clarity — the issue is seen as litigative, not fundamental.

This case underlines a critical truth in Indian tax litigation:
Big numbers don’t always mean big risks.

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