Akzo Nobel India Faces ₹111.63 Cr Tax Addition Proposal

Akzo Nobel India has received a Draft Assessment Order proposing additions of ₹111.63 crore, concerning corporate tax and transfer pricing provisions for Assessment Year 2023-24.
This significant tax proposal is currently under analysis by the company's management.

Reader Takeaway: Tax liability risk looms as company analyzes ₹111.63 Cr addition; past litigation highlights ongoing scrutiny.

What just happened (today’s filing)

Akzo Nobel India Limited informed exchanges on March 9, 2026, that it received a Draft Assessment Order from the Income Tax Department on March 8, 2026.
The order, pertaining to Assessment Year 2023-24, proposes additions amounting to ₹111.63 crore. These proposed additions are related to corporate tax and transfer pricing regulations.

The company stated that the exact financial impact cannot be determined at this stage, as it is a draft order open to further proceedings. Akzo Nobel is currently analyzing the order and will formulate a response in consultation with its tax consultants within the stipulated time.

Why this matters

This proposed tax addition represents a significant potential financial liability for Akzo Nobel India. If the additions are upheld after the company's response and potential appeals, it could directly impact profitability and cash flows.

Transfer pricing assessments, in particular, can be complex and lead to substantial adjustments if the tax authorities deem inter-company transactions not to be at arm's length.

The backstory (grounded)

Akzo Nobel India has a history of facing tax-related challenges. In late 2024, the company received GST show cause notices from Karnataka and Uttar Pradesh demanding over ₹46 crore for disallowed input tax credit.

Previously, in September 2022, the Delhi High Court dismissed an appeal by Akzo Nobel India, upholding a tax tribunal's decision that disallowed deductions for administrative services paid to a Singapore-based group company. This case highlighted past scrutiny on the company's transfer pricing arrangements.

What changes now

• The company faces the immediate task of preparing a detailed response to the Income Tax Department regarding the proposed tax additions.
• There is a potential for increased tax expenses and interest, should the additions be confirmed.
• Investor sentiment could be affected by the uncertainty surrounding the final tax liability.

Risks to watch

The primary risk is the potential confirmation of the ₹111.63 crore tax additions, leading to a material increase in the company's tax liability.

Further escalation or litigation could also result in additional legal and professional costs, impacting financial performance.

Peer comparison

Akzo Nobel India operates in the highly competitive Indian paint industry, alongside major players like Asian Paints, Berger Paints, and Kansai Nerolac. The company's recent acquisition of Akzo Nobel's Indian operations by JSW Paints underscores the dynamic market. While this tax issue is specific to Akzo Nobel, significant tax liabilities could affect its financial health and competitive positioning relative to peers who may not be facing similar challenges.

Context metrics (time-bound)

• The Draft Assessment Order was received on March 8, 2026, concerning Assessment Year 2023-24.

What to track next

• Akzo Nobel India's submission strategy and the substance of its response to the Income Tax Department.
• Any further communications or orders from the tax authorities regarding the assessment.
• The final resolution of this tax matter and its impact on the company's financial statements for the relevant fiscal year.
• Management's commentary on the tax issue during future earnings calls.