State Bank of India, the country’s largest lender by assets, said on Friday that it had received an income tax demand notice amounting to ₹6,337.5 crore, including interest, following scrutiny assessment proceedings for the assessment year 2024.
According to the bank’s regulatory filing, the demand stems from multiple disallowances made by tax authorities on various grounds during the assessment process. Such scrutiny assessments involve a detailed review of financial statements and tax filings, often leading to disputes over the treatment of specific items.
The bank indicated that similar issues have been contested in earlier years, suggesting that the current demand is part of a broader and continuing tax dispute rather than an isolated development.
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Disclosure Under Market Regulations
SBI disclosed the development under the Securities and Exchange Board of India’s Listing Obligations and Disclosure Requirements (LODR) norms, citing that the amount exceeds the prescribed materiality threshold.
These norms require listed entities to promptly inform stock exchanges of significant events that could influence investor decision-making. The framework emphasizes transparency, corporate governance, and timely dissemination of material information.
In its filing, the bank noted that such disclosures are mandated to ensure that investors and stakeholders are kept informed about developments that may have financial or operational implications.
Legal Challenge Ahead
The bank said it intends to challenge the tax demand before appellate authorities. The order, dated March 19, was issued under Sections 143(3), 144C(3), and 144B of the Income Tax Act, provisions that govern assessment procedures and dispute resolution mechanisms.
Section 143(3) pertains to detailed scrutiny assessments, while Sections 144C and 144B outline processes related to draft assessment orders and faceless assessment systems, respectively. These provisions are commonly invoked in complex tax cases involving large corporate entities.
SBI’s move to appeal aligns with established practice among large institutions that contest tax demands they consider disputable, often leading to prolonged litigation across multiple forums.
Limited Operational Impact, Bank Says
Despite the scale of the demand, SBI stated that the tax order would have no impact on its operations or business activities.
The bank’s assertion reflects a distinction often made in such cases between contingent liabilities under dispute and immediate financial outflows. Until adjudicated by appellate authorities, such demands typically remain contested and are not necessarily reflected as final liabilities.
As the matter proceeds through legal channels, the case adds to a series of high-value tax disputes involving major corporations, where interpretations of tax provisions and accounting treatments continue to be tested through litigation.
