Central Bank of India Challenged Over ₹296 Crore Tax Demand

Central Bank of India has received an income tax assessment order demanding ₹296.08 Crore for Assessment Year 2024-25. The bank received the order on March 30, 2026.

Tax Order Details

Central Bank of India announced on March 31, 2026, that it has received an assessment order from the Income-tax Department. The order relates to Assessment Year (AY) 2024-25 and includes a ₹296.08 Crore tax demand.

The bank is actively contesting the demand, disputing specific disallowances and additions made by tax authorities.

Management expects no material financial or operational impact from this demand, anticipating a substantial resolution through the appeals process.

Impact of the Tax Demand

If the bank's appeals against the tax demand are unsuccessful, it could be liable to pay the full ₹296.08 Crore. This would represent a significant financial outflow.

However, given the bank's recent performance and its proactive stance in challenging the order, investors will likely monitor the progress of its legal recourse.

Historical Context

Central Bank of India, a public sector bank established in 1911, offers a wide array of banking services across its extensive network.

Historically, the bank has faced regulatory scrutiny. In March 2026, it was fined ₹63.60 lakh by the RBI for non-compliance with KYC and BSBDA norms. Earlier, in June 2024, it received a ₹1.45 crore penalty for lapses related to 'loans and advances' and 'customer protection' directives.

The bank has also been involved in tax litigation in the past. For instance, Income Tax Appellate Tribunal rulings in favour of the bank were observed in cases concerning assessment years 2013-14 to 2016-17, particularly regarding Section 115JB of the Income Tax Act.

Immediate Shareholder Impact

For shareholders, the immediate change is awareness of a potential financial liability, albeit disputed.

The bank's management is committed to challenging the demand through legal channels, aiming for a favourable outcome.

Potential Risks

The primary risk is the potential requirement to pay the ₹296.08 Crore liability if the bank's appeals are unsuccessful.

This could affect profitability and capital adequacy, depending on the final resolution.

Comparison with Peers

Public sector banks like State Bank of India, Bank of Baroda, and Punjab National Bank are peers facing similar regulatory environments. In FY24–25, the PSU banking sector collectively reported record profits, indicating resilience. While specific tax demands of this magnitude are not frequently reported for peers, regulatory penalties for compliance lapses are common across the sector.

What Investors Should Monitor

Investors will be closely tracking the progress of Central Bank of India's appeal against the Income-tax Department's assessment order.

Any further updates from the bank regarding the ongoing legal proceedings or pronouncements from appellate authorities will be critical.

The bank's ability to secure relief in this tax dispute will be a key factor.