Hyundai India Receives Show Cause Notice for Alleged Tax Discrepancies

One of India’s biggest automobile manufacturers, Hyundai Motor India Ltd (HMIL), has come under scrutiny after receiving a show cause notice from the Maharashtra State Tax Authority. The notice pertains to alleged irregularities in the company’s input tax credit (ITC) claims for the financial year 2020-21.

Details of the Tax Demand

The Maharashtra State Tax Authority has alleged that Hyundai claimed excess ITC in its GSTR 3B and GSTR 9 filings, which is not corroborated by data in GSTR 2B and GSTR 8A. Additionally, discrepancies were cited in the reverse charge mechanism (RCM) tax paid by the company.

The notice demands a total of Rs 5.02 crore, comprising Rs 2.741 crore towards tax and Rs 2.279 crore in interest. Hyundai has clarified in regulatory filings with the NSE and BSE that it plans to respond to the notice within the prescribed timelines.

No Immediate Impact on Operations

In its statement, Hyundai Motor India Ltd (HMIL) emphasized that the issue is a routine compliance matter and assured stakeholders that the notice does not impact its financial, operational, or any other activities. The company also confirmed that it would work with the adjudicating authority to resolve the matter.

Q2 Profit Decline

This notice comes amidst a challenging quarter for Hyundai Motor India. For Q2FY25, the company reported a 16% drop in net profit, declining to Rs 1,375.47 crore from Rs 1,628.46 crore in the same quarter last year. Revenue also saw a dip of 7.5%, falling to Rs 17,260.38 crore compared to Rs 18,659.69 crore a year earlier. The company attributed the decline to weak domestic demand and the Red Sea crisis, which disrupted exports.

Hyundai Motor India’s stock price rose by 1.65% today, gaining 30.65 points to close at Rs 1,884.00.

While the show cause notice talks about potential discrepancies, Hyundai’s assurance of compliance and resolution suggests no long-term impact on its operations. However, coupled with declining profits, the company has a lot to work on.

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