Food Delivery Giant Faces Tax Compliance Scrutiny from Pune Tax Authorities, Plans to Challenge Order
Food delivery and quick commerce platform Swiggy Limited has received a tax demand of ₹7.59 crore from Maharashtra state authorities over alleged violations related to professional tax deductions from employee salaries, the company disclosed in a regulatory filing on Saturday, April 5.
According to the exchange filing, the Office of the Profession Tax Officer in Pune issued an assessment order to Swiggy on April 4, 2025, covering the period from April 1, 2021, to March 31, 2022. The order alleges non-compliance with provisions under the Maharashtra State Tax on Professions, Trades, Callings & Employments Act, 1975.
Details of the Tax Assessment Order
The tax demand specifically addresses alleged violations pertaining to the deduction of professional tax from employee salaries as required under Maharashtra state tax regulations. The exact amount demanded by tax authorities stands at ₹7,59,86,813 (seven crore, fifty-nine lakh, eighty-six thousand, eight hundred and thirteen rupees).
“On April 04, 2025, the Company has received an assessment order for the period April 01, 2021, to March 31, 2022, for an amount of ₹7,59,86,813,” Swiggy stated in its filing with the National Stock Exchange (NSE).
The company further elaborated that the tax authorities have alleged a “violation of provisions pertaining to deduction of Profession Tax from the employees salary, under the Maharashtra State Tax on Professions, Trades, Callings & Employments Act, 1975.”
Swiggy’s Response to the Tax Demand
The food delivery platform has indicated its intention to contest the tax demand through appropriate legal channels. In its exchange filing, Swiggy expressed confidence in its position regarding the assessment.
“The Company believes that it has strong arguments against the Order and is taking necessary steps to protect its interest through review/appeal,” the filing stated.
Swiggy has also sought to reassure investors and stakeholders that the tax demand will not significantly impact its financial health or operations. The company specifically mentioned that the order has “no major adverse impact on its financials and operations.”
Multiple Tax Challenges for Swiggy
This professional tax demand from Maharashtra authorities comes shortly after Swiggy faced another tax-related issue at the central level. Just last week, the company received an assessment order with an additional tax demand exceeding ₹158 crore for the same fiscal period (April 2021 to March 2022).
That order, issued by the Deputy Commissioner of Income-tax, Central Circle 1(1), Bangalore, related to alleged contraventions including:
- Cancellation charges paid to merchants are disallowed under Section 37 of the Income-tax Act 1961
- Interest income on income tax refund not being offered to tax
Similar to its stance on the professional tax demand, Swiggy indicated that it planned to challenge the income tax order as well, expressing confidence in its legal position.
Impact on Swiggy’s Stock Performance
Following the disclosure of the professional tax demand, Swiggy’s shares experienced downward pressure in the stock market. The company’s shares closed 2.32% lower at ₹337.20 after Friday’s trading session, compared to ₹345.20 at the previous market close.
The negative trend continued into the next trading day, with Swiggy shares dropping further. By 9:58 AM on the following trading day, the stock was trading 5.71% lower at ₹317.95 per share on the BSE.
Professional Tax Compliance in Maharashtra
The Maharashtra State Tax on Professions, Trades, Callings & Employments Act, 1975, requires employers operating in the state to deduct professional tax from their employees’ salaries according to specified slabs and remit these amounts to the state government.
Companies functioning as employers are responsible for:
- Registering with the Professional Tax department
- Deducting appropriate professional tax from employee salaries
- Timely filing of returns and depositing the collected tax with the government
Non-compliance with these provisions can result in assessment orders, penalties, and interest charges, as evidenced by the action against Swiggy.
Looking Ahead
As Swiggy prepares to challenge the professional tax demand through review or appeal processes, the company will need to navigate multiple tax compliance issues simultaneously. The outcome of these tax disputes could have implications for other companies in the gig economy and food delivery sector regarding their tax compliance practices.
For investors and market observers, these developments highlight the regulatory challenges facing major players in India’s rapidly evolving digital economy landscape. While Swiggy maintains that these tax demands will not materially impact its operations or financial position, the company’s handling of these regulatory challenges will be closely watched by stakeholders in the coming months.
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