City Union Bank Faces ₹97.22 Cr Refund Reduction from Income Tax Order, Plans Appeal

Refund claim reduced by ₹97.22 crore; Income tax demand raised: Nil.
Reader Takeaway: Refund claim cut ₹97 Cr, no demand; bank appeals, citing past rulings.

What just happened (today’s filing)

City Union Bank announced on March 24, 2026, that it has received an Income Tax assessment order for Assessment Year 2024-25.

The order resulted in a reduction of the bank's refund claim by ₹97,22,24,471 (approximately ₹97.22 crore).

Notably, the assessment has not raised any demand for additional tax payment from the bank.

Why this matters

While the reduction in refund claim is significant, the absence of a tax demand mitigates any immediate financial pressure on the bank.

However, it signifies a disagreement with the tax authorities over certain deductions claimed.

The bank's confidence in its legal standing and plans for appeal suggest a belief in overturning the disallowances.

The backstory (grounded)

City Union Bank, a private sector lender established in 1904, has a long history of navigating tax regulations.

Past tax disputes have centred on deductions under specific sections like 36(1)(viia) and 36(1)(vii), which are also the subject of the current assessment order.

In 2009, the bank disclosed involvement in 32 income tax disputes aggregating about ₹117.17 crore.

Additionally, the bank has faced regulatory penalties from the Reserve Bank of India for non-compliance with norms, including a ₹66 lakh fine in early 2024 for issues concerning asset classification and KYC guidelines.

What changes now

For shareholders, the immediate financial impact is minimal due to the nil demand.

However, the bank will incur costs and dedicate resources to pursuing the appeal process.

The outcome of the appeal will determine whether the refund claim reduction is permanent or reversed.

Risks to watch

The primary risk is that the bank's appeal against the Income Tax assessment order may not be successful.

Although the bank expresses confidence, the tax authorities' disallowances represent a potential financial exposure if the appeal fails.

Peer comparison

Comparable private sector banks like Federal Bank, South Indian Bank, and Karur Vysya Bank also operate within the Indian regulatory and tax framework.

These banks, like City Union Bank, focus on retail and MSME lending and are subject to similar tax assessments and compliance requirements.

Context metrics (time-bound)

What to track next

Monitor the progress and outcome of City Union Bank's appeal against the Income Tax assessment order.

Pay attention to any further communication or rulings from tax authorities or appellate bodies.

Observe the bank's financial performance and commentary for any updates on the appeal's progress or impact.