Orient Cement Plans Appeal Against ₹52.4 Crore Tax Demand

Orient Cement has received an Income Tax order for Assessment Year 2023-24, demanding ₹52.40 crore. The company disputes the demand, primarily caused by a transfer pricing adjustment of ₹54.33 crore, and plans to appeal.

Orient Cement expects the final tax demand to be significantly reduced to ₹3.20 crore following a rectification process and the appeal.

Tax demands stemming from transfer pricing adjustments, where tax authorities scrutinize inter-company transactions, can create financial uncertainty for businesses. The company views the current order as erroneous and intends to contest it.

An appeal process allows companies to present their case to tax authorities, aiming for a favorable resolution. This is a common approach when companies disagree with tax assessments. While a contingent tax liability exists, its magnitude is expected to decrease substantially.

This is not the first time Orient Cement has faced such scrutiny. In February 2025, a rectification order for Assessment Year 2018-19 revised a ₹24.58 crore tax demand down to zero. Transfer pricing disputes are common in India, often hinging on accepted methodologies and documentation.

The company, a key player in the Indian cement sector, reported a net profit of ₹27.80 crore for the third quarter of FY26. It will now focus on presenting its case to the Income Tax Appellate Authorities and allocate resources to manage the appeals process.

While the company anticipates a significant reduction, the final outcome of the appeal remains uncertain. There is a possibility, however small, that the final demand could be higher than the projected ₹3.20 crore, and the process itself could be time-consuming.

Orient Cement operates in a competitive sector alongside major players like UltraTech Cement, Shree Cement, Ambuja Cements, and ACC Ltd. These companies also face similar transfer pricing regulations and scrutiny from tax authorities, making such disputes a known factor across the industry.