Swiggy faces Rs 7.59 crore tax demand from Pune Profession Tax dept; plans to appeal

Online food and grocery delivery platform Swiggy, which competes with Zomato, has been served an assessment order demanding Rs 7.59 crore from the Office of the Profession Tax Officer in Pune.

The notice relates to the financial year 2021-22, and officials allege that the company violated provisions pertaining to the deduction of Profession Tax from employees' salaries under the Maharashtra State Tax on Professions, Trades, Callings & Employments Act, 1975.

Swiggy said in a regulatory filing that it plans to challenge the order, arguing it has strong grounds for review or appeal. The company also said the development will not have a major impact on its financials or everyday operations.

Separate tax demand from Bengaluru  

This notice comes shortly after Swiggy disclosed another assessment order for the same period, totalling more than Rs 158 crore. That order was issued by the Deputy Commissioner of Income Tax in Bengaluru.

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.

Swiggy maintains that it has solid legal arguments against the demand and is taking all necessary steps to appeal, adding that it believes this second order will also not affect its financial position or day-to-day business.