Hero pays Rs 811 cr tax on Honda buyout

The BM Munjal-promoted Hero Group has paid Rs 811 crore ascapital gains tax for buying out erstwhile partner Honda from their jointventure - Hero Honda, Central Board of Direct Taxes (CBDT) said on Thursday.

"Hero has paid the entire tax amount of Rs 811 crore intwo tranches, Rs 100 crore in March and Rs 711 crore in April, at the highestrate of 22 per cent. They have not sought any concession," a CBDTspokesperson said.

It is capital gains tax, paid by way of withholding it fromthe payment made by Hero to Honda, he added.

In December last year, the Indian promoter of thetwo-wheeler maker, the B M Munjal family had agreed to buyout the entire 26 percent stake of Honda in Hero Honda for Rs 3,841.83 crore. It brought an end to a26-year-old successful joint venture.

Following Honda's exit, Hero Group promoter firm HeroInvestments Pvt Ltd (HIPL's) stake in Hero Honda was increased to 43.33 percent as of last month from 17.33 per cent as on December 31, 2010.

In March, the Cabinet Committee on Economic Affairs (CCEA)had approved a proposal for a Rs 4,500 crore foreign direct investment in HIPLby Bain Capital and Lathe Investment.