Mphasis Limited has received an order and a demand notice from the Income Tax Department pertaining to the Assessment Year 2020-21. The total demand, including interest, amounts to ₹ 151.73 crores. This pertains to a dispute over TDS on overseas payments to foreign associates. The company strongly believes the claims are not maintainable and is confident of a favorable outcome upon appeal, expecting no material financial impact currently.
Receipt of Tax Assessment Order
Mphasis Limited has formally announced the receipt of an official communication from the Income Tax Department in Bangalore. This action follows a selection for scrutiny for the Assessment Year (AY) 2020-21. The communication includes both an order under sections 201 and 201(1A) and a demand notice under section 156 of the Income Tax Act, 1961.
Details of the Demand
The core issue leading to the demand relates to the alleged non-deduction of Tax Deducted at Source (TDS) on payments made for subcontracting charges to overseas subsidiaries and associated enterprises. The total demand raised by the authority amounts to ₹ 151.73 crores, which includes the principal demand plus associated interest charges.
Company Stance and Outlook
Mphasis has conducted a preliminary assessment and maintains a strong position regarding this matter. The management is confident that the claims are not maintainable against the Company and anticipates no material financial impact. Furthermore, favorable precedents concerning non-deductibility of tax on similar overseas payments exist for other companies in the industry for preceding assessment years. The company is actively evaluating all options to pursue legal remedies and file an appropriate appeal against the demand order.
Compliance and Disclosure
The Company has confirmed that no penalty, restriction, or sanction was imposed pursuant to this communication. Mphasis has taken the above intimation on record as per mandatory disclosure requirements and assures stakeholders that the provided information is true and correct to the best of their knowledge.
Source: BSE
