Swiggy to challenge Rs 158 cr tax order

Bengaluru-based food delivery platform Swiggy on Tuesday said it has received an assessment order from the Income Tax Department’s Central Circle in the city, adding Rs 158.26 crore to its taxable income for the financial year 2021-22. The company has stated that it will appeal the order, asserting that it has a strong legal case and intends to challenge the findings before the appropriate authority.

According to Swiggy’s regulatory filing on April 1, the tax department raised objections on two key grounds. First, it disallowed cancellation charges paid to merchants under Section 37 of the Income Tax Act, 1961. Second, it cited Swiggy’s failure to offer for taxation the interest income earned on an income tax refund.

The assessment order, issued on March 29, resulted in an additional tax demand of Rs 158.26 crore. Swiggy has downplayed the potential financial impact of the order, stating in its disclosure that it does not foresee any major adverse effect on its operations. “The company believes that it has strong arguments against the order and is taking necessary steps to protect its interest through review and appeal,” the stock exchange filing stated.

The development comes at a time when India’s tax authorities are increasing scrutiny of digital-first businesses, particularly in the platform economy, where financial structures often involve complex revenue-sharing arrangements. The tax department has been examining deductions claimed by internet-based companies, focusing on expenses such as promotional costs, merchant incentives, and operational reimbursements.

Rival food delivery platform Zomato had also received a tax demand of Rs 803.4 crore, including interest and penalty, from the GST department in Thane, in December.

The tax disputes add to the regulatory challenges facing the companies as they navigate post-IPO compliance requirements and market scrutiny. The two are also under a regulatory scanner for allegedly violating competition laws and favouring certain restaurants on its platform.


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