Hindustan Zinc receives ₹1,170 crore tax demand notice; shares drop

In a filing to the stock exchanges on July 30, Hindustan Zinc said that it has received an assessment order of ₹1,170.66 crore, which includes tax and interest, from the National Faceless Assessment Unit (NFAC) of the Income Tax Department for AY 2020-21.

The company informed the bourses that the demand is based on identical disallowances and additions imposed on it in previous years and that it has secured favourable orders from the Income Tax Appellate Tribunal on such issues in earlier years.

Hindustan Zinc said that it will file an appeal and a corresponding stay application with the Income Tax Appellate Tribunal against the order within the prescribed timelines. The mining company said that given the favourable outcomes of previous appeals, the company is confident of a positive resolution in the case. Hindustan Zinc said that it does not anticipate a material financial impact from the order.

Hindustan Zinc’s parent company, Vedanta Ltd, also received an assessment order of ₹1289.1 crore, including tax and interest, from the NFAC for AY 2020-21.

Vedanta said in the filing that it has identified a computational error in this demand determination. The company plans to file a rectification request before the Jurisdictional Assessing officer (JAO). The mining company also said that after the rectification of the error, the expected demand will be nil.

The mining company added that it is confident of a positive resolution in this case as the underlying additions and disallowances in the assessment order are substantially similar to those raised in previous years, where the company has already secured favourable rulings from the Income Tax Appellate Tribunal.

Hindustan Zinc shares closed 0.91% higher at ₹647.3 per share on the NSE.