IIFL Home Finance Tax Demand: ₹963 Cr Demand Issued
By Business Desk
IIFL Home Finance faces a ₹963.39 crore tax demand from the IT authority for April 2018-February 2025, citing issues with ORC income, interest assets, and ESOP expenses.
IIFL Finance and its core subsidiary, IIFL Home Finance Limited, have been served significant income tax assessment orders. These demands, covering the period from April 2018 to February 2025, impose a tax liability of ₹963.39 crore on IIFL Home Finance.
Understanding the Tax Demand Components
The substantial tax bill includes cess and surcharge, primarily resulting from various additions and disallowances made by the tax authority. These adjustments stem from specific financial reporting practices.
- Overriding Commission (ORC) Income: This relates to commissions earned that the tax authority has re-evaluated.
- Interest Strip Assets: Certain interest-related assets were subject to additions by the tax department.
- Section 36(1)(viii) Deductions: Disallowances were made concerning deductions claimed under this specific section of the Income Tax Act.
- ESOP Expenses: Employee Stock Option Plan expenses also contributed to the disallowances.
IIFL Home Finance firmly disputes these claims, asserting that income related to ORC and interest strip assets had already undergone taxation. The company also points to differing interpretations regarding “general reserves” and the treatment of ESOP expenses.
Company Response and Legal Recourse
Both IIFL Finance and IIFL Home Finance Limited are actively pursuing appellate and rectification remedies to challenge the assessment orders. They maintain confidence in their legal position.
The companies have stated their belief that these tax demands will not materially impact their financial stability or their day-to-day operational activities.
Parent Company Faces Separate Tax Action
In a related development, the parent entity, IIFL Finance Limited, secured a temporary stay on the recovery of a separate outstanding tax demand of ₹475.56 crore. This stay is conditional.
The condition requires IIFL Finance Limited to pay 5% of the disputed amount in installments, with the final payment due by December 15, 2026. This provides a structured timeline for addressing the separate financial obligation.