Muthoot Finance, one of India’s leading non-banking financial companies (NBFCs), is preparing to challenge a tax demand issued by the Kerala State GST Department amounting to Rs. 1.52 crore.
The demand stems from a dispute over the taxation of corporate guarantees provided to a subsidiary, a claim the company strongly denies.
Breakdown of the GST Demand
The total tax liability demanded by the authorities includes:
- Tax: ₹54.00 lakh
- Interest: ₹44.22 lakh
- Penalty: ₹54.00 lakh
The tax department alleges that corporate guarantees extended by Muthoot Finance to its subsidiary are subject to GST under current regulations. However, the company’s arguments — citing misclassification, principles of valuation, and the fact that the guarantee was not utilized — were dismissed by the adjudicating officer.
Company’s Position
Muthoot Finance has expressed firm disagreement with the order. In its official disclosure to the stock exchanges under SEBI’s Listing Obligations and Disclosure Requirements (LODR), the company clarified that it is in the process of filing an appeal. The order was passed by the Deputy Commissioner (Adjudication-1) in Ernakulam.
Despite the scale of the demand, Muthoot Finance has assured stakeholders that the order will not materially impact its financial, operational, or business activities.
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