Tushar Kotecha, Chief Financial Officer of IIFL Home Finance, a subsidiary of IIFL Finance,said the company will pursue all available legal remedies and remains confident of securing relief at the appellate stage. The tax demand relates to the block assessment period from April 2018 to February 2025.
Explaining the reasons behind the tax demand, Kotecha said the assessment primarily relates to accounting and tax treatment of notional income recognised under IndAS, including interest strip accounting, along with the treatment of ESOP expenses and certain other items.
“There are three or four issues, which the department has picked up in this assessment,” Kotecha said. “There are one or two more items on which the department has failed to appreciate that we have already offered it for tax and paid regular tax on it.” The company believes the additions do not accurately reflect the tax treatment already followed in previous years.
As of 11:05 am, IIFL Finance shares were trading at ₹673.20. The company, with a market capitalisation of ₹28,643.03 crore, has delivered more than 47% gains over the past year.
Kotecha said the company expects the appellate process to take between six months and one year. Despite the size of the tax demand, he expressed confidence that the matter would be resolved in the company’s favour. “We feel that this will get deleted at the first appellate authority level,” he said.
Kotecha also dismissed concerns that the tax dispute could delay or derail any value-unlocking initiatives, including potential fundraising at the parent or housing finance subsidiary level. “We don’t think it will have any impact on that,” he said, adding that the company remains in continuous discussions with its tax advisers and legal counsel.
Drawing a parallel with IIFL Finance’s own tax case, where authorities recently reduced the mandatory deposit requirement from 20% to 5% while granting a stay, Kotecha said IIFL Home Finance expects a similar outcome.IIFL Finance had earlier received a stay on recovery of its separate tax demand after being asked to deposit 5% of the disputed amount.
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