IIFL Finance Shares Fall 8% as IIFL Home Finance Receives Rs 963.39 Crore Tax Demand
Key Takeaways
- •IIFL Finance shares dropped 8% on Tuesday after its subsidiary IIFL Home Finance received an income tax demand of Rs 963.39 crore.
- •The Rs 963.39 crore demand covers the period from April 2018 to February 2025, and the company disputes the additions while pursuing appellate remedies.
- •IIFL Finance has separately secured a stay on recovery of a Rs 475.56 crore income tax demand raised against the parent company.
- •Under Central Board of Direct Taxes guidelines, stays on recovery of disputed demands are generally conditioned on depositing about 20% of the disputed amount.
- •The demand remains a contested amount rather than a settled liability until the appellate process concludes.
Shares of IIFL Finance fell sharply on Tuesday, dropping 8%, after the company disclosed that its subsidiary IIFL Home Finance had received an income tax demand of Rs 963.39 crore.
The demand covers the period from April 2018 to February 2025, a span of nearly seven years. The company said it disputes the additions made by the tax authorities and is pursuing appellate remedies against the order.
In a separate development, IIFL Finance said it has secured a stay on another income tax demand of Rs 475.56 crore raised against the parent company.
IIFL Finance is a Mumbai-headquartered non-banking financial company (NBFC) that provides home loans, gold loans, business loans and microfinance, largely through its subsidiaries. IIFL Home Finance is its wholly-owned housing finance arm, focused primarily on affordable home loans. As a listed company whose shares trade on the BSE and the National Stock Exchange, IIFL Finance reports material developments such as large tax demands to the stock exchanges under market regulator SEBI's disclosure norms.
Under India's income tax framework, a taxpayer can contest a demand before the Commissioner of Income Tax (Appeals) and, at a subsequent stage, the Income Tax Appellate Tribunal (ITAT). Recovery of a disputed demand can be deferred where an appellate authority grants a stay, which is the remedy IIFL Finance obtained for the Rs 475.56 crore demand while the assessment is challenged. Under Central Board of Direct Taxes guidelines issued to appellate authorities, such stays have generally been conditioned on the taxpayer depositing a portion of the disputed demand, around 20%.
With the Rs 963.39 crore order now headed into appeal, a key point ahead is whether IIFL Home Finance likewise secures a deferment of recovery while its challenge is heard, mirroring the relief the parent company obtained, and how the disputed additions are examined at successive appellate levels. Until adjudication concludes, the demand remains contested rather than a settled liability.
Source: Economic Times Markets
