RBL Bank has received a Rs 173.08 crore tax demand notice from Maharashtra GST authorities regarding input tax credit claims for the 2022-23 fiscal year. The lender plans to contest the notice, citing favorable past regulatory outcomes. Shares closed 0.63% higher on the BSE.
RBL Bank has received a tax notice from the Maharashtra Goods and Services Tax (GST) authorities demanding Rs 173.08 crore. The demand pertains to the financial year 2022-23 and includes the principal tax amount along with applicable interest and penalties. The tax authorities have questioned the input tax credit (ITC) claimed by the bank, specifically under a separate GST registration used for its digital banking operations.
In simple terms, an input tax credit allows a business to offset the taxes it pays on its own purchases against the taxes it collects from its customers. The dispute focuses on whether the bank correctly followed the rules when claiming these specific credits during the 2022-23 financial year. Tax officials have alleged these claims were wrongful, leading to the demand.
The bank has officially stated that it plans to contest the notice. Management pointed out that it faced similar scrutiny for the exact same tax treatment during the 2018-19 and 2019-20 fiscal years, and in those previous instances, the outcomes were in the bank's favor. By citing these past results, the bank aims to demonstrate that its current tax accounting methods for its digital business vertical remain in line with regulatory expectations.
Despite the size of the claim, RBL Bank has indicated that it does not expect this development to have any material impact on its financial stability, profitability, or day-to-day operations. This stance has helped maintain stability in investor sentiment. Following the announcement, shares of RBL Bank rose 0.63% to close at Rs 404.55 on the BSE.
For investors, the key monitorable is the upcoming legal and regulatory process as the bank defends its position before the tax authorities. Tax-related disputes involving input tax credits are common for financial institutions that operate across multiple states and maintain various business lines, which often leads to complex tax filings. While the bank has downplayed the risk to its business, shareholders may continue to watch for future updates, such as any potential hearings or further responses from the tax department, to see how the matter is finally resolved.