Grasim Industries Ltd. said India’s income tax office has asked the company to pay Rs 83,300 crore ($1.1 billion) as capital gains tax related to the sale of shares in a group firm.
The transaction in Aditya Birla Capital Ltd. took place in the tax-assessment year 2018-2019 and no monies were received by the company that could be subject to tax, Grasim said in an exchange filing Friday. “The company would take appropriate action against the said order which it believes is against the spirit of tax laws,” it added.
Grasim, part of a group under Chairman Kumar Mangalam Birla, noted in the filing that India had sought dividend distribution tax related to the same deal in 2019, which was suspended by the courts until the tribunal makes a final decision.
“There seems to be no justification for seeking capital gain tax, as there was no sale involved,” said Ketan Dalal, founder at Katalyst Advisors, a boutique structuring and advisory firm.
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