Mphasis has received a rectification order from the Income Tax department for Assessment Year 2023-24, raising its tax demand by Rs 130.94 crore to a total of Rs 2,417.80 crore. The company clarified that this increase stems from additional interest charges under Section 220 of the Income-tax Act. Management maintains that the order will not have a material impact on its financial statements and is currently preparing to file a fresh rectification petition to contest computation errors.
Mphasis Receives Revised Income Tax Demand of Rs 2,417.80 Crore
Previous Demand: Rs 2,286.86 crore | Revised Demand: Rs 2,417.80 crore
Reader Takeaway: Tax demand increased by Rs 130 crore via interest charges; company disputes figures and signals no material impact.
What just happened
Mphasis Ltd has been issued a rectification order dated October 9, 2026, by the Income Tax department in Bengaluru for the Assessment Year 2023-24. This order increases the company’s total tax liability from the previously reported Rs 2,286.86 crore to Rs 2,417.80 crore. The incremental demand of Rs 130.94 crore is specifically attributed to interest levied under Section 220 of the Income-tax Act, 1961.
Why this matters
For stakeholders, this filing highlights a recurring tax compliance hurdle. While the headline number of Rs 2,417.80 crore is substantial, the company has explicitly stated that it does not expect this revised order to materially affect its financial statements. This guidance is intended to reassure investors that the liability, as it currently stands, is either contested or within the company's existing tax provisioning strategy.
What changes now
Mphasis has confirmed it is evaluating legal remedies to address the assessment. The company intends to file a fresh rectification petition to correct what it describes as errors in the tax computation. By engaging in this formal process, Mphasis seeks to mitigate the additional interest burden.
Risks to watch
The primary risk remains the ongoing nature of the assessment. Investors should monitor how the Assistant Commissioner of Income Tax responds to the company’s forthcoming petition. Any unfavorable outcome in the rectification process could lead to further cash outflows or potential litigation expenses in subsequent quarters.
What to track next
Shareholders should look for follow-up disclosures regarding the filing of the rectification petition and any subsequent communication from the tax authorities. The company's management commentary in upcoming earnings calls will also be critical to understanding if any further provisions are required.