MUMBAI: The income-tax department has started issuing notices to several multinational consumer firms, disallowing deductions on expenses of advertising, marketing and sales promotion under a hitherto unused provision of the Income Tax Act.Notices have been issued to consumer companies such as Hindustan Unilever, P&G, L’Oreal, LG and Maruti Suzuki. If these costs are disallowed, the profit would jump to Rs 150 and tax would increase to Rs 45. This is nothing but transfer pricing and AMP dispute in a new bottle,” said Munjal Almoula, partner, Grant Thornton India.Several MNCs in India are already battling tax demands on their advertising, marketing and sales promotion (AMP) expenses. Even before their settlement, fresh notices have arrived, largely at consumer goods makers, although they don’t mention the AMP or transfer-pricing but use the same logic to compute the liabilities.The income-tax department has started issuing notices to several MNCs, disallowing deductions on expenses incurred toward advertising, marketing and sales promotion over the last few years. Industry experts peg the total demand raised by the tax department on this count at about Rs 10,000 crore.

Source: Economic Times May 25, 2018 01:26 UTC