Gujarat State Petronet Challenges ₹77.76 Crore Tax Demand Citing Calculation Error

Gujarat State Petronet Ltd. (GSPL) is challenging an Income Tax order for Assessment Year 2024-25 that includes a ₹77.76 crore demand with interest. The company argues the total income was incorrectly calculated at ₹1683 crore, differing from the ₹1435 crore it reported and was assessed at.

GSPL maintains that the demand stems from a clear departmental calculation mistake, not from any non-compliance on its part. The company plans to file for rectification of the error and a stay of the demand.

The Income Tax order, received on March 23, 2026, pertains to Assessment Year 2024-25 (Financial Year 2023-24). GSPL flagged a significant discrepancy, stating its total income was calculated at ₹1683 crore instead of the ₹1435 crore it reported and assessed.

While GSPL is confident the demand is based on a departmental error, the outstanding ₹77.76 crore represents a potential financial obligation. Such tax disputes can affect investor sentiment, even when the company believes they are unfounded, due to the engagement with regulatory bodies.

GSPL, a key player in India's natural gas infrastructure, operates extensive gas pipeline networks mainly in Gujarat. Its main competitors in the sector include GAIL (India) Ltd., involved in nationwide transmission and marketing, and Adani Total Gas Ltd., which focuses on city gas distribution. The company has a history of tax litigation, including appeals against tribunal orders on disallowing certain expenses for tax purposes. Contingent liabilities related to tax matters for FY23 stood between ₹500-600 crore, disclosed in annual reports, highlighting a history of tax-related assessments and disputes.

Following receipt of the order, GSPL will apply for rectification of the mistake to the Assessing Officer and simultaneously seek a stay of the demand. The company is confident that the rectification process will resolve the erroneous demand, and it does not anticipate a material financial impact from this dispute.

The main risk is the possibility that the demand could be upheld if the rectification application fails, requiring GSPL to pay the ₹77.76 crore. Prolonged uncertainty could also arise from delays in the rectification process.

Investors will be monitoring GSPL's progress on filing the rectification and stay applications. The outcome of these filings and the Income Tax Department's final decision on the rectification will be key developments.