Mphasis announced receiving an Assessment Order and a Notice of Demand totaling ₹2,286.86 crores from the Income Tax Department for Assessment Year 2023-24 on March 25, 2026. The additions pertain to ESOP expenses, overseas subcontractor payments, and GST turnover differences. The management believes there is no material financial impact, plans to file a Rectification Petition, and is confident of a favorable appellate outcome.
Tax Authority Communication Received
Mphasis Limited has formally informed the stock exchanges regarding the receipt of significant communication from the Income Tax Department. The communication, received on March 25, 2026, comprises an Assessment Order under Section 143(3) read with Section 144B, alongside a Notice of Demand amounting to Rs. 2,286.86 crores under Section 156 of the Income-Tax Act, 1961. This action pertains specifically to the Assessment Year 2023-24.
Summary of Assessment Details
The Assessment Order confirms the income reported by the Company in its return, detailing variations assessed by the officer. Key areas leading to the proposed addition to taxable income include: (i) allowance claimed on ESOP expense; (ii) subcontractor expenses paid to overseas associated enterprises without deduction of tax at source; and (iii) an addition based on the GST turnover difference relative to the Audited Financial Statements. Importantly, the communication did not impose any penalty, restriction, or sanction.
Management’s View and Proposed Action
Management has stated that, upon preliminary assessment, they view no material financial impact on the Company. This confidence stems from the recurring nature of some variations in preceding years, pending finality in the Supreme Court, and the existence of favorable precedents from jurisdictional High Courts. The Company has outlined immediate steps: it will file a Rectification Petition regarding errors identified in the computation sheet. Furthermore, Mphasis is evaluating all available legal remedies and confirms it shall file an appropriate appeal against the assessment order, believing it has a good case on merits for a favorable decision at the appellate stage.
Source: BSE
