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Praveg Limited announced on April 7, 2026, the receipt of a Show Cause Notice (SCN) from GST authorities. The notice, dated March 26, 2026, pertains to the financial year 2020-21 and alleges improper availment and utilization of input tax credit (ITC), totaling ₹19,10,758. Authorities also seek applicable interest and penalties.
The SCN questions Praveg's claims of input tax credit – a credit mechanism for taxes paid on business inputs. Praveg stated it is thoroughly reviewing the notice and does not foresee any immediate significant impact on its finances or operations.
This marks Praveg's second encounter with GST authorities on similar grounds. In July 2025, the company disclosed receiving a previous SCN from Central GST, Daman, for alleged tax evasion involving up to ₹2.46 crore.
Such notices highlight broader indirect tax compliance issues in India. For example, the Gujarat GST department reported losses of ₹171 crore from wrongful ITC claims during the first quarter of the 2021-22 financial year. Praveg Limited was formerly known as Praveg Communications (India) Limited, changing its name in December 2022.
If the tax authorities ultimately rule against Praveg, the company could face demands for the disputed ₹19.1 lakh, plus accrued interest and penalties, potentially impacting profitability. Preparing a formal response may lead to further administrative or legal proceedings.
Key risks include the principal financial demand, costs incurred for legal defense, and any potential reputational damage if tax disputes become prolonged. The fact that Praveg has faced a similar, larger notice previously might also invite closer examination.
For the twelve months ending March 2026, Praveg's Return on Equity was -0.24%, indicating a net loss over that period. Its Debt-to-Equity ratio was 23.26%. The company's Return on Equity over the past three years was 4.44%.
Investors will monitor Praveg's formal submission to the SCN, the progress of any regulatory proceedings, and the company's updated assessment of potential financial implications. How Praveg addresses this current notice, especially in comparison to the prior ₹2.46 crore SCN, will be a key point of observation.