Multinational consumer goods company, Colgate-Palmolive (NYSE:CL) India Ltd, is contesting a ₹170 crore transfer pricing order from the Indian Income Tax Department for FY21-22. The allegations suggest that the company undercharged its parent firm, Colgate-Palmolive Asia Pacific Limited (CPAP), for technology and marketing services, potentially leading to Goods and Services Tax (GST) discrepancies. These actions are believed to have resulted in reduced taxable income in India and a lower tax liability. Despite this, Colgate-Palmolive India asserts its compliance with local Indian tax laws and international standards and plans to challenge the order through judicial system legal remedies.
In response to the tax order, Colgate-Palmolive India's share price increased to ₹2031 from a previous close of ₹2054 on BSE and recorded a turnover of ₹15.11 crore (INR100 crore = approx. USD12 million). The stock has gained 36.38% since the beginning of the year, demonstrating low volatility with a beta value of 0.3 and an RSI of 52.5.
Despite disallowed international transactions pending draft assessment proceedings and potential Dispute Resolution Panel involvement, Colgate-Palmolive India confirmed no financial or operational impact. The company reported a Q2 profit rise of 22% to ₹340 crore, up from previous net profit of ₹278.02 crore, on total revenue of ₹1462.38 crore, up from ₹1378.37 crore. The company also declared a first interim dividend of ₹22 per equity share for FY23-24.
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