Ixigo Faces ₹99.82 Lakh Tax Demand, Plans Appeal

Le Travenues Technology Limited, which operates the travel booking platform ixigo, has received a significant tax order. The Haryana State Tax Department has demanded ₹99,82,243 from the company. This demand stems from allegations of excess Input Tax Credit (ITC) claimed during the Financial Year 2019-20. The company, however, is preparing to appeal the order.

Details of the Tax Demand

The ₹99,82,243 demand includes the principal tax amount, accrued interest, and penalties. The core of the dispute centers on the company's utilization of Input Tax Credit, a key component in India's Goods and Services Tax (GST) system that allows businesses to offset taxes paid on inputs against their output tax liabilities.

Company's Response and Confidence

ixigo has publicly stated its intention to contest the tax demand. The company expressed confidence in its position, suggesting it believes the demand is unwarranted. An appeal will be filed with the relevant tax authorities, with management focused on presenting its case.

Potential Financial Impact

While ixigo anticipates no direct financial impact beyond the costs associated with contesting the case if its appeal is successful, the implications of an unsuccessful appeal are notable. Failure to win the appeal would necessitate payment of the full ₹99,82,243 demand, which could affect the company's profitability.

ixigo's Background and Market

ixigo is a prominent player in India's online travel market, known for its technology-driven platform serving a broad customer base. The company recently completed its Initial Public Offering (IPO) in March 2024, raising approximately ₹740 crore. Online travel and e-commerce businesses navigate complex GST regulations, where accurate ITC claims are crucial for managing operating expenses effectively.

Immediate Implications for the Company

The tax dispute will likely lead to increased legal and professional expenses as ixigo prepares its appeal. Management's attention may also be significantly focused on this legal proceeding. A contingent liability of ₹99.82 lakh has been recognized, pending the appeal's resolution.

Key Risks to Monitor

The primary risk for ixigo lies in the possibility that its appeal may not succeed. If the demand is upheld, the company will have to pay the full amount, along with any additional associated costs. The appeal process itself could also be protracted and demanding on resources, potentially diverting management focus from core business operations.

Industry Context

Competitors such as MakeMyTrip, EaseMyTrip, and Yatra Online operate within a similar regulatory framework. While specific tax disputes of this magnitude are not frequently disclosed for these peers in recent public filings, the general risk of navigating complex tax compliance and ITC regulations is a shared concern across the online travel sector.

Recent Financials

Le Travenues Technology Ltd. recently reported a Profit After Tax of ₹261 crore for the third quarter of FY25, alongside consolidated revenues of ₹677 crore.

What to Watch Next

Investors and stakeholders will be watching the timeline and progress of ixigo's appeal filing. Updates on any appellate proceedings, including hearings and final judgments, will be crucial. Further disclosures from the company regarding legal expenses or the final outcome of the appeal will also be closely monitored.