IIFL Finance drops as subsidiary faces Rs 963 crore tax demand

IIFL Finance dropped 3.07% to Rs 675 after its material subsidiary, IIFL Home Finance, received an assessment order raising a tax demand of Rs 963.39 crore, including surcharge and cess.

The order, received on 24 August 2026, relates to block assessment proceedings arising from search and seizure action for the period from 1 April 2018 to 3 February 2025.

The principal additions and disallowances include overriding commission income of about Rs 490 crore, deduction claimed under Section 36(1)(viii) of about Rs 305 crore, interest strip assets of about Rs 392 crore and ESOP expenses of about Rs 53 crore.

IIFL Home Finance said it has substantial factual and legal grounds to contest the additions and is pursuing appellate, rectification and other remedies. It said it does not presently expect the matter to have a material impact on its financial position or operations.

Separately, IIFL Finance said the Income Tax Authority has granted a stay on recovery of an earlier Rs 475.56 crore tax demand raised under a block assessment order dated 12 May 2026. The stay is valid until 31 December 2026 or disposal of the company's appeal, whichever is earlier.

The stay is subject to payment of Rs 23.78 crore, equivalent to 5% of the disputed demand, in instalments. IIFL Finance has already paid the first instalment of Rs 5 crore on 13 August 2026.

IIFL Finance, along with its subsidiaries IIFL Home Finance and IIFL Samasta Finance, is a leading retail-focused NBFC. It offers a range of lending products, including home loans, gold loans, business loans, microfinance, developer finance and capital market finance. It serves retail and corporate customers through a network of over 4,900 branches across more than 500 cities in India.

On a consolidated basis, the company's total income for Q1FY27 stood at Rs 2,202.4 crore, up 34% YoY, while pre-provision operating profit rose 50% YoY to Rs 1,252.4 crore. Profit before tax increased 161% YoY to Rs 928.6 crore, reflecting strong operating leverage and improved asset quality. For Q1FY27, PAT (pre-NCI) stood at Rs 713.1 crore, marking a 160% YoY growth, highlighting the continued strength of the company?s secured lending strategy.

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