Kalpataru Projects International announced receiving two significant penalties from UAE authorities concerning NAFIS compliance, totaling approximately ₹1.88 crores. Furthermore, the company received an Assessment Order from the Income Tax Department raising a tax demand of INR 1.80 Crores for A.Y. 2023-24. The company plans to appeal both the tax demand and the UAE penalties, stating neither has a significant impact currently.
Penalties Imposed by UAE Authorities
The Company received intimation regarding orders passed by local authorities in the United Arab Emirates on 27th February, 2026, concerning compliance with Emiratization regulations under the National In-Country Value Program (NAFIS).
Details of UAE Penalties
- First Penalty: Imposed by the Abu Dhabi Labour Court, UAE Ministry of Human Resources and Emiratization, amounting to AED 300,000 (~INR 74.33 lakhs) for a NAFIS violation.
- Second Penalty: Imposed by the same authority, amounting to AED 458,950 (~INR 1.14 crores) related to the recovery of amounts disbursed under the NAFIS program.
In both instances, the Company has confirmed that the penalties levied do not have any significant impact on the entity’s finances or operations.
Income Tax Assessment Order Received
On 27th February, 2026, the Company received an Assessment Order under Section 143(3) of the Income Tax Act, 1961, from the Income Tax Department.
Key Details of Tax Assessment
The Assessing Officer passed the order for A.Y. 2023-24, which included certain additions/disallowances and initiated penalty proceedings.
- Tax Demand: The authority raised a tax demand of INR 1.80 Crores, which includes interest amounting to INR 17.07 lakhs.
- Company Stance: The Company believes it has a strong case to defend the matter and intends to file an appeal against the Order within the prescribed timelines. The impact of this demand is currently stated as not significant.
Loan Prepayment Disclosure
Separately, on 27th February, 2026, the Company remitted BRL 85.14 million to Banco HSBC S.A., Brazil. This payment was made at the request of the Bank for the early prepayment or maturity of a loan taken by Fasttel Engenharia S.A., a wholly owned subsidiary, against which Kalpataru had issued corporate guarantees totaling BRL 91.56 million in 2025.
Source: BSE
