IIFL Finance Limited has provided an update regarding a tax demand of ₹963.39 crore issued to its subsidiary, IIFL Home Finance Limited, by the Assistant Commissioner of Income Tax. While the company is contesting the assessment, a stay order has been granted, contingent on a 5% payment of the disputed demand. IIFL Finance believes it has strong grounds to appeal and does not currently anticipate a material impact on its financial position or operations.
Tax Assessment Update for IIFL Home Finance
IIFL Finance Limited is providing an update on a tax demand issued to its subsidiary, IIFL Home Finance Limited, by the Assistant Commissioner of Income Tax, Central Circle – 4(4), Mumbai. The assessment pertains to the block period from April 1, 2018, to February 3, 2025. This update follows an earlier intimation dated May 12, 2026, and was considered by the Board of Directors on August 24, 2026.
Details of the Assessment Order
The IT Authority issued an assessment order on August 24, 2026, raising a tax demand of ₹963.39 crore (including surcharge and cess) on IIFL Home Finance Limited. This demand arises from block assessment proceedings following a search and seizure action. The principal additions and disallowances in the order relate to overriding commission income (approximately ₹490 crore), deductions claimed under section 36(1)(viii) (approximately ₹305 crore), interest strip assets (approximately ₹392 crore), and ESOP expenses (approximately ₹53 crore).
Stay Order and Payment Conditions
In continuation of the earlier disclosure regarding a tax demand of ₹475.56 crore, the IT Authority has granted a stay of recovery of the outstanding demand until December 31, 2026, or the disposal of the Company’s appeal before the Commissioner of Income Tax (Appeals), whichever is earlier. This stay is subject to the payment of ₹23.78 crore, which is 5% of the disputed demand, in installments up to December 15, 2026. IIFL Finance made the first installment payment of ₹5 crore on August 13, 2026, and is taking necessary steps to comply with the stay order conditions.
Company’s Stance and Outlook
IIFL Home Finance Limited believes it possesses substantial factual and legal grounds to contest these additions and disallowances. The company asserts that income related to ORC and interest strip assets has already been offered to tax, and appropriate credit has not been fully considered. The issue concerning section 36(1)(viii) involves the interpretation of “general reserves,” and the treatment of ESOP expenses is believed to be contrary to established legal positions. These matters have been examined in earlier scrutiny assessments.
IIFL Finance Limited is actively pursuing appellate and other available legal remedies. Based on its assessment of the merits and received advice, the company does not presently expect this matter to have any material impact on its financial position or operations. The company has challenged the assessment order before the appellate authority, and the matter is pending adjudication.
Source: BSE
