Income Tax department threatens penal action against Reckitt Benckiser's India arm
May, 01st 2014
In the latest salvo fired by the Indian tax department against MNC's, the revenue authorities have threatened penal action against a domestic arm of Reckitt Benckiser, the UK based maker of Dettol and Durex Condoms, two sources familiar with the development told ET NOW.
" The income tax department has issued a notice against Reckitt Benckiser Healthcare India for assessment year 2012-13 asking the company to show cause why a penalty should not be enforced for providing inaccurate details of income. The notice also alleges misuse of tax holiday norms by the Indian arm under section 80 IC of the Income Tax act and questions why excess deduction claimed for the Baadi Unit should not be disallowed and treated as income ," said an individual familiar with the proceedings.
Reckitt Benckiser joins a growing list of MNC's like Vodafone, Shell, IBM and Nokia that have been pulled up by the Indian revenue authorities in recent years.
"The income tax department holds the view that after claiming 100% deduction under Section 80 IC on a new unit for five years, Reckitt Benckiser Healthcare India was eligible only for 30% deduction. They feel the company cannot again start claiming 100% deduction in the sixth year on the same unit treating it as a substantial expansion of the same unit ," said a second individual on the condition of anonymity.
In response to an email query from ET NOW , a Reckitt Benckiser spokesperson said, "We are in receipt of the query raised by the Income Tax Department. As a responsible organisation, RB India has and will continue to cooperate with the authorities for this matter."