IIFL Home Finance, a material subsidiary of IIFL Finance Limited, has received an assessment order raising a tax demand of INR 963.39 crore, including surcharge and cess, following block assessment proceedings arising from a search and seizure action.
The assessment order was received on August 24, 2026, from the Assistant Commissioner of Income Tax, Central Circle – 4(4), Mumbai. It covers the block period from April 1, 2018 to February 3, 2025, and the demand has been raised under Section 158BC(1)(c) of the Income Tax Act, 1961.
The principal additions and disallowances in the assessment order relate to overriding commission (ORC) income of approximately INR 490 crore, a deduction claimed under Section 36(1)(viii) of approximately INR 305 crore, interest strip assets of approximately INR 392 crore and ESOP expenses of approximately INR 53 crore.
IIFL Home Finance has said it has substantial factual and legal grounds to contest these additions and disallowances. On ORC income and interest strip assets, the company contends that the relevant income had already been offered to tax and that appropriate credit for taxes/income so offered had not been fully considered.
The company has also disputed the treatment of the Section 36(1)(viii) deduction, stating that the issue concerns the interpretation of “general reserves” for determining the applicable statutory limit. It has further contended that the treatment of ESOP expenses is contrary to the legal position relied upon by the company. Several of these issues, it said, had also been examined in earlier scrutiny assessments.
“IIFL Home Finance Limited believes that it has substantial factual and legal grounds to contest these additions/disallowances,” the company noted in an exchange filing.
IIFL Home Finance is pursuing the appellate, rectification and other remedies available under law. Based on its assessment of the merits and advice received, the company said it does not presently expect the matter to have any material impact on its financial position or operations.
In the same exchange filing, IIFL Finance Limited separately disclosed an update on its earlier INR 475.56 crore tax demand. Recovery of the outstanding amount has been stayed until December 31, 2026, or disposal of the company’s appeal before the Commissioner of Income Tax (Appeals), whichever is earlier, subject to payment of INR 23.78 crore, representing 5% of the disputed demand. IIFL Finance has already paid INR 5 crore towards the first instalment on August 13, 2026.
