Swiggy Gets INR 99 Lakh Tax Demand Notice

SUMMARY

The foodtech giant received an income tax demand notice of INR 53.5 Lakh along with an interest of INR 45.44 Lakh.

The order was passed by the deputy commissioner of Income Tax department, TDS Circle, Bengaluru for April 2017 to March 2018 period

Swiggy is looking to file an appeal against the order

Foodtech major Swiggy has received an income tax demand notice of INR 53.5 Lakh. Besides the tax, the company has also been asked to pay an interest of INR 45.44 Lakh, taking the total amount to INR 98.9 Lakh.

In an exchange filing, the company said that the order was passed by the deputy commissioner of Income Tax department, TDS Circle, Bengaluru, and pertains to April 2017 to March 2018 period.

“Non-deduction of tax under section 194C of the Income-tax Act, 1961 on the cancellation charges paid to the merchants by the company,” the filing said about the violation which the company was alleged to have made.

Swiggy said it believes it has strong arguments against the order and is looking to appeal against the order.

“The company believes that the order has no major adverse impact on its financials and operations,” it added.

This comes at a time when Swiggy and its rival Zomato have received a number of tax notices over the past year or so. The Sriharsha Majety-led company was slapped with a GST demand notice of INR 326.7 Cr in 2023 pertaining to the period between July 2020 and March 2022. However, the company filed a case against the notice.

Meanwhile, the Deepinder Goyal-led company received a GST demand notice of INR 401.70 Cr, along with an interest of the same amount as penalty, in December 2024. However, the company got some relief when the Haryana GST authorities dropped a GST demand notice of INR 5.9 Cr against it.

While Swiggy and Zomato were the trendsetters in the foodtech segment, they are now making big investments in quick commerce amid its rising popularity. Earlier today, brokerage firm BofA Securities downgraded Zomato and Swiggy citing lower growth in the food delivery segment and high losses in quick commerce.

The brokerage firm trimmed Swiggy’s rating to ‘Underperform’ from ‘Buy’ earlier, while the price target was reduced to INR 325 per share from INR 420.

Swiggy’s Post-IPO Era

The foodtech major’s shares got listed on the NSE at INR 420 apiece in November 2024, a premium of nearly 8% from its IPO issue price of INR 390 per share. On the BSE, the stock made its debut at INR 412, a premium of almost 6% from its IPO issue price.

However, the stock has seen correction over the last few months amid a negative sentiment in the Indian stock market. Shares of Swiggy ended today’s trading session 4.12% lower at INR 323.75 apiece on the BSE.

Swiggy has been on an expansion spree with multiple new rollouts over the last few months as it looks to shore up its revenue. Recently, it launched its B2B platform ‘Assure’ to deliver kitchen supplies to restaurants. In January, it forayed into the services marketplace segment with the launch of ‘Pyng Professional’.

On the financial front, the foodtech major reported a 39% increase in its consolidated net loss to INR 799 Cr in Q3 FY25 from INR 574.4 Cr in the year-ago period. Operating revenue zoomed 31% to INR 3,993.1 Cr during the quarter under review from INR 3,048.6 Cr in Q3 FY24.