Swiggy Hit with Dual Tax Notices Totaling Over Rs.165 Crore for FY 2021-22

Swiggy, one of India’s leading food and grocery delivery platforms, has found itself under regulatory scrutiny after receiving two significant tax notices orders for the financial year 2021-22. Combined, these notices amount to a tax demand of over ₹165 crore, raising concerns over the company’s tax practices.

1. First Tax Notice: Maharashtra Professional Tax Demand of ₹7.59 Crore

The first of the two notices comes from the Office of the Profession Tax Officer in Pune, who claims that Swiggy owes ₹7.59 crore due to non-compliance with the Maharashtra State Tax on Professions, Trades, Callings & Employments Act, 1975.

Key Allegation: Failure to deduct professional tax from employees’ salaries during the assessment year.

Swiggy’s Response: The company has rejected the allegations, asserting that they are unfounded. Swiggy has initiated steps to seek a review and potentially appeal the decision.

2. Second Tax Notice: Massive ₹158.25 Crore Income Tax Demand

In a separate incident, Swiggy has received a much larger notice from the Deputy Commissioner of Income Tax, Central Circle 1(1), Bengaluru. This notice demands ₹158.25 crore in taxes, with the authorities raising objections about certain business expenditures.

Key Points of Contention:

Cancellation charges paid to partner merchants were disallowed under Section 37 of the Income-tax Act, 1961. Interest income on income tax refunds Allegedly not offered to tax.

Swiggy’s Stance:

Swiggy is confident that it has strong grounds to challenge the income tax order. The company is committed to pursuing legal avenues to safeguard its interests.

3. Total Tax Demands Exceed ₹165 Crore for Fiscal Year 2021-22

Combined, these two notices have resulted in a total demand of ₹165 crore. Despite the large sums involved, Swiggy remains optimistic about its legal position. Swiggy emphasises that these tax proceedings are not expected to have a material impact on its financial position or day-to-day operations.

4. Swiggy’s Future Actions: Review and Appeal Process

Swiggy is already in the process of reviewing the assessments for both notices.  The team is  planning to File appeals to contest the allegations and tax demands.

5. What Does This Mean for Swiggy’s Financial Health?

Despite the hefty tax demands, Swiggy remains confident that the matter will not disrupt its business operations or financial performance. The company has reassured its stakeholders that it is taking proactive steps to resolve these tax-related issues.

If your business is facing tax-related challenges, don’t hesitate to reach out to Vakilsearch. Our senior tax experts are here to provide clarity on various tax matters, ensuring that your business stays compliant and well-prepared for any legal proceedings.

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Akash G Varadaraj

Content Writer at Vakilsearch

I'm Akash. G. Varadaraj, an official content writer at Vakilsearch with over four years of experience. I'm here to simplify complex legal concepts into easily accessible articles that even a layman can understand. As a regular contributor to this news portal, I aim to keep you informed in the dynamic world of law, compliance, taxation, and much more. I ensure that you get to know our Vakilsearch expert's take on every piece of news, how it can help, and what you should do.

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