Hinduja Global Solutions Faces ₹15.49 Cr Tax Demand Over Disputed Forex Loss

Hinduja Global Solutions (HGS) is facing a ₹15.49 crore tax demand from the Income Tax Department for the Assessment Year 2021-22.

Income Tax Assessment Order Issued

The demand arises from the disallowance of a foreign exchange loss of ₹34.31 crores claimed by the company. The assessment order included an interest component of ₹6.95 crores.

HGS disputes the tax department's decision to disallow the foreign exchange loss. The company has stated that the disallowance and subsequent demand have no material impact on its financials or ongoing operations.

Next Steps and Company Response

The company plans to contest the Income Tax Assessment Order. It intends to file a rectification application under Section 154 of the Income Tax Act specifically concerning the computation of interest.

Company Background and Operations

Hinduja Global Solutions, part of the Hinduja Group, is a global provider of IT services and business process management. Following the divestment of its healthcare business, HGS has focused on digital customer experience (CX), artificial intelligence (AI), and automation. The company employs hedging policies and a distributed delivery model to manage currency volatility risks.

Financial Context

As of March 2025, HGS reported contingent liabilities of ₹2,498 crores, highlighting potential future financial obligations.

Industry Context

HGS operates within the IT services sector, a competitive environment characterized by evolving tax regulations, particularly concerning digital services. Peers in the mid-tier IT space, such as Coforge, Mphasis, and Hexaware, also navigate complex global tax landscapes.

Potential Risks

While HGS maintains the tax demand will not materially affect its operations, tax disputes can consume management attention. The primary risk for the company is the potential outcome of its appeal process.

What to Watch For

Investors will monitor the progress of HGS's appeal before the Commissioner of Income Tax (Appeals) and the resolution of the rectification application for interest computation.