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Pernod Ricard and Diageo face India tax probe over Scotch whisky imports
- •Indian tax officials are investigating Pernod Ricard and Diageo over the alleged misclassification of bulk Scotch whisky imports.
- •The probe focuses on whether the companies wrongly claimed lower tariffs introduced under the recent India-UK trade pact.
- •Tax inspectors recently visited Pernod Ricard's India headquarters and searched multiple offices of Diageo's Indian unit, United Spirits.
- •The trade pact, effective July 15, lowered import taxes on certain Scotch imports from 150 percent to 75 percent, but authorities argue this relief excludes bulk concentrates.
- •Both liquor giants stated they are fully cooperating with the Directorate of Revenue Intelligence and have complied with local laws.
Key Questions Answered
Indian tax officials are investigating whether Pernod Ricard and Diageo wrongly classified bulk Scotch imports to benefit from lower tariffs introduced under the India-UK trade pact. Tax inspectors argued that the duty relief lowering taxes from 150% to 75% did not apply to bulk concentrates used to make brands like Royal Stag and Blenders Pride.
The India-UK trade pact took effect on July 15. Under this trade agreement, India agreed to slash import tariffs on certain Scotch imports from 150% down to 75%.
Both liquor giants stated that they are fully cooperating with Indian authorities. Pernod Ricard noted it is providing all requested information to the Directorate of Revenue Intelligence, while Diageo confirmed it has complied with local laws and provided all necessary documents and clarifications.
