Hero pays Rs 811 crore tax on Honda stake buyout: CBDT
July, 15th 2011
The BM Munjal-promoted Hero Group has paid Rs 811 crore as capital gains tax for buying out erstwhile partner Honda from their joint venture, Hero Honda, Central Board of Direct Taxes (CBDT) on Thursday said.
"Hero has paid the entire tax amount of Rs 811 crore in two tranches, Rs 100 crore in March and Rs 711 crore in April, at the highest rate of 22 per cent. They have not sought any concession," a CBDT spokesperson told media.
It is capital gains tax, paid by way of withholding it from the payment made by Hero to Honda, he added.
In December last year, the Indian promoter of the two-wheeler maker, the B M Munjal family had agreed to buyout the entire 26 per cent stake of Honda in Hero Honda for Rs 3,841.83 crore. It brought an end to a 26-year-old successful joint venture.
Following Honda's exit, Hero Group promoter firm Hero Investments Pvt Ltd (HIPL's) stake in Hero Honda was increased to 43.33 per cent as of last month from 17.33 per cent as on December 31, 2010.
In March, the Cabinet Committee on Economic Affairs (CCEA) had approved a proposal for a Rs 4,500 crore foreign direct investment in HIPL by Bain Capital and Lathe Investment.