Colgate-Palmolive India receives Rs 248.74cr tax demand notice

Colgate-Palmolive India: The income tax demand concerns transfer pricing-related matters for the March 31, 2021 financial year.

Tax Notice and Response

Colgate-Palmolive (India) Ltd (CPIL) has been issued a tax demand notice of Rs 248.74 crore by the Income Tax Authority over a transfer pricing-related issue.

The FMCG major has announced its intention to challenge the order before the appellate tribunal.

Details of the Notice

CPIL, which specializes in oral and personal care products, received the notice on July 26, 2024, as disclosed in a regulatory filing. The tax demand pertains to the financial year ending March 31, 2021. The Final Assessment Order for the Assessment Year 2020-21 includes an interest amount of Rs 79.63 crore.

Company’s Position

In response to the notice, CPIL stated, “The company will be filing an appeal before the Income Tax Appellate Tribunal against the said order.” CPIL emphasized that this order would not affect its financial operations or other activities.

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The company explained that the demand arises mainly from transfer pricing-related issues, similar to disallowances from prior assessment years, against which CPIL has already appealed.

Financial Impact

CPIL reported net sales of Rs 5,644 crore for the fiscal year 2023-24, indicating that the tax demand is a significant amount relative to its recent financial performance. Despite the sizeable tax notice, the company maintains that it will not impact its ongoing business activities.

This case underscores the complexities and challenges multinational companies often face regarding transfer pricing and compliance with tax regulations.