IIFL Finance Shares Drop 8% on ₹963 Cr Tax Demand
By Business Desk
IIFL Finance shares tumbled 8% after its subsidiary, IIFL Home Finance, received a ₹963.39 crore tax demand, impacting stock performance.
Shares of IIFL Finance fell nearly 8% on Tuesday following substantial tax demands issued to both the company and its subsidiary, IIFL Home Finance. The primary demand targets IIFL Home Finance for ₹963.39 crore, which includes surcharge and cess.
IIFL Finance itself received a separate demand totaling ₹23.78 crore. These demands collectively span an assessment period from April 1, 2018, to February 3, 2025, according to company statements.
Key Demands
- IIFL Home Finance: ₹963.39 crore (including surcharge and cess)
- IIFL Finance: ₹23.78 crore
- Assessment Period: April 1, 2018, to February 3, 2025
The tax demands stem from principal additions or disallowances related to several key areas. These include overriding commission (ORC) income, deductions claimed under section 36(1)(viii) of the Income Tax Act, 1961, interest strip assets, and ESOP expenses.
Contesting the Additions
IIFL Home Finance has stated its firm intention to contest these additions and disallowances. The company cites substantial factual and legal grounds, arguing that income related to ORC and interest strip assets has already been offered for tax, with appropriate credit not fully considered.
Furthermore, IIFL Home Finance asserts that the issue concerning section 36(1)(viii) involves an interpretation of “general reserves.” The company also maintains that the treatment of ESOP expenses contradicts its established legal position.
Previous Demand and Recovery Stay
In a related development, IIFL Finance had previously disclosed a block assessment order dated May 12, 2026, for a tax demand of ₹475.56 crore. The Income Tax Authority has since granted a stay on the recovery of this outstanding demand.
This stay is effective until December 31, 2026, or until the company’s appeal before the Commissioner of Income Tax (Appeals) is resolved, whichever comes first. The stay is contingent upon specific conditions being met by the company.
Stay Conditions
- Payment of ₹23.78 crore (5% of disputed demand)
- Installments due by December 15, 2026
- Compliance with other specified conditions
IIFL Finance confirmed it has already made the first installment payment of ₹5 crore on August 13, 2026. The company is actively taking the necessary steps to comply with the stay order, projecting no material impact on its business operations or financial position from either the new demands or the previous assessment.