E-commerce marketplace Meesho has reported a sharp increase in its income tax-related disputes, with the aggregate tax demand raised by the Income Tax Department rising to ₹2,071.8 crore during the financial year 2025-26, according to the company’s annual report.
The tax disputes have more than tripled compared with the previous financial year, when the company had disclosed an income tax demand of more than ₹572 crore. Meesho has challenged the tax proceedings and said that it has taken legal and administrative steps against the assessment orders.
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Fresh Tax Demand of Nearly ₹1,500 Crore
According to Meesho’s annual report, the Income Tax authorities made certain additions to the taxable income declared by the company for Assessment Year 2023-24 during FY26.
Following the assessment, the tax authorities raised a demand of ₹14,997.38 million, or approximately ₹1,499.74 crore. Along with the demand, the department also issued a show-cause notice proposing initiation of penalty proceedings under Sections 274 and 270A of the Income-tax Act, 1961.
Section 270A deals with penalties relating to under-reporting and misreporting of income, while Section 274 prescribes the procedure associated with imposing penalties under the Income-tax Act.
The latest demand has significantly increased Meesho’s overall exposure to income tax disputes.
Earlier Demand of Over ₹572 Crore
The fresh assessment follows an earlier tax dispute involving a demand of more than ₹572 crore raised by the Income Tax Department in FY25.
Meesho has challenged that demand before the appropriate judicial forum and has obtained a stay order against the recovery proceedings.
With the addition of the fresh demand of approximately ₹1,499.74 crore, the company’s disclosed tax disputes now stand at around ₹2,071.8 crore.
The company, however, has not accepted the tax liability and is contesting the assessments through available legal and statutory remedies.
Meesho Files Rectification Request and Appeal
In relation to the latest assessment order, Meesho said it has filed a rectification application before the Deputy Commissioner of Income Tax.
The company has also filed an appeal before the National Faceless Appeal Centre (NFAC), Delhi, challenging the assessment.
The dual course of action indicates that Meesho is seeking relief both through the rectification mechanism available under the Income-tax Act and through the appellate process.
The outcome of these proceedings could determine the ultimate tax liability payable by the company, if any, depending on the issues involved in the assessment and the decisions of the tax authorities and appellate forums.
Meesho Continues to Invest Aggressively Despite Tax Dispute
The disclosure of the tax disputes comes against the backdrop of a strong operational year for Meesho.
Meesho Chairman, Managing Director and Chief Executive Officer Vidit Aatrey described FY26 as one of the company’s strongest years. At the same time, he acknowledged that the company deliberately increased spending during the year to strengthen its long-term growth prospects.
According to Aatrey, Meesho increased investments in user acquisition and technology during FY26 as the company sought to take advantage of favourable conditions for acquiring new customers.
He said the strategy had an immediate financial impact, with both contribution margin and free cash flow declining as the company invested in consumer acquisition and infrastructure ahead of the revenue expected to be generated from those investments.
The company said these investments were evaluated against its long-term return thresholds and that spending was restricted where the expected economics did not justify the expenditure.
User Base Rises 33 Per Cent
Meesho reported substantial growth in its user base during FY26.
The company’s user base increased by 33 per cent to 26.4 crore, indicating continued expansion of its reach in India’s highly competitive e-commerce market.
The number of annual transacting sellers also increased sharply. According to the annual report, the company recorded an 87 per cent increase, taking the number of annual transacting sellers to approximately 9.61 lakh.
The growth in sellers and users highlights the scale at which Meesho is operating as it seeks to deepen its presence beyond traditional e-commerce centres and reach customers across smaller cities and towns.
Logistics Network Expands
Meesho’s logistics ecosystem also remained a significant component of its operations.
During FY26, the company’s logistics network consisted of around 18,000 logistics partners and approximately 1.2 lakh delivery agents.
The large delivery network is aimed at supporting the company’s expanding seller and customer base while improving its ability to fulfil orders across different parts of the country.
Content-Led Commerce Emerges as Growth Driver
Another notable development highlighted in Meesho’s annual report was the growing importance of content-led commerce.
The platform had 63,213 active content creators during FY26, who collectively generated more than 1.4 million pieces of order-generating content.
The company is increasingly using content and creator-driven discovery to connect customers with products. Such a model can help sellers showcase products in a more engaging manner while encouraging purchases through social and content-driven interactions.
Revenue Rises to ₹12,626 Crore
Despite higher investments during the year, Meesho reported significant growth in consolidated revenue.
The company’s annual consolidated revenue increased to ₹12,626 crore in FY26, compared with ₹9,390 crore in FY25.
This represents a substantial year-on-year increase and reflects the expansion of Meesho’s customer and seller ecosystem.
At the same time, the company continued to operate with a net loss, although the loss narrowed considerably during the year.
Loss Narrows Sharply
Meesho’s loss declined to ₹1,358 crore in FY26, compared with a loss of ₹3,942 crore in FY25.
The reduction in losses came despite the company’s decision to step up investments in technology and customer acquisition.
The financial performance therefore reflects a combination of strong revenue growth and continued spending aimed at building the company’s future operating scale.
Tax Dispute Remains a Key Financial Overhang
While Meesho has reported significant operational growth and a substantial reduction in losses, the income tax disputes represent a sizeable contingent financial issue for the company.
The cumulative demands of approximately ₹2,071.8 crore are substantial when compared with the company’s reported FY26 loss of ₹1,358 crore.
However, the tax demands do not necessarily represent the company’s final tax liability. Meesho has challenged the assessments and has initiated rectification and appellate proceedings. The ultimate financial impact will depend on the outcome of these proceedings.
The company’s disclosures therefore underscore the importance of monitoring the pending tax litigation alongside its rapidly expanding e-commerce operations.
What Happens Next?
The immediate legal developments will centre on the proceedings arising from the assessment for AY 2023-24, including Meesho’s rectification request before the Deputy Commissioner of Income Tax and its appeal before the National Faceless Appeal Centre.
The earlier tax demand of more than ₹572 crore is also under challenge and has reportedly been stayed.
Until the pending proceedings are finally resolved, the tax demands remain disputed claims rather than conclusively determined liabilities. The eventual orders passed by the tax authorities and appellate forums will determine whether the demands are sustained, modified or substantially reduced.
For Meesho, FY26 thus presents a mixed picture: rapid growth in users, sellers and revenue, a significant reduction in losses, but also a sharp escalation in disclosed income tax disputes.
