City Union Bank has received a revised Goods and Services Tax (GST) demand of ₹208.91 crore from the Deputy Commissioner, State Tax, Tanjore. This amount represents a significant reduction from the earlier total claim of ₹337.79 crore, following a remand order by the Madurai Bench of the High Court of Madras.

The new demand order was issued on October 14, 2026, under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017. It pertains to the fiscal year 2021-22. The original assessment had demanded tax of ₹191.05 crore along with interest and penalty of ₹143.73 crore. The revised order now demands tax of ₹110.37 crore along with interest and penalty of ₹98.52 crore.

Nature of the Dispute

The primary issues driving the tax demand involve the treatment of exempt income and input tax credit (ITC) claims. The GST Department has challenged:

• The taxation of portions of exempt income, including interest on investments, profit on sale of securities, and exchange profits.
• The estimation of taxable supplies for income not collected or services not rendered, which the department alleges violates Sections 7 and 15 of the TNGST Act 2017.
• The disallowance of 100% ITC on supplies within the same PAN-GSTIN structure.

The Bank stated that the GST Department did not accept the Reconciliation statement in GSTR-9C filed by the Bank, which was duly tallied with financial statements and certified by the Statutory Central Auditors (SCA).

Impact on Financial Position

City Union Bank maintains that it has been regular in complying with GST-related compliances since the rollout of the tax regime. The Bank asserts that it discharges GST on all charges subjected to GST collected from customers and claims only eligible ITC. According to the disclosure, the GST audit did not point out any evasion of income from the books of accounts.

The Bank characterized the demand as devoid of legal sanctity and containing factual errors. It plans to pursue appropriate legal remedies as provided under the GST Act. Consequently, the Bank expects no material financial implications, stating that it has complied with GST provisions in letter and spirit.

What the Numbers Show

The reduction in the total demand from ₹337.79 crore to ₹208.91 crore indicates a partial success in the Bank's legal challenge at the High Court level. However, the quantum remains substantial relative to typical quarterly earnings for mid-sized banks. The persistence of the demand despite SCA certification suggests a fundamental disagreement on the interpretation of exempt income taxation versus taxable supply estimation under the TNGST Act.

City Union Bank has completed its participation in the Emerging India CEO Forum organized by Nuvama Institutional Equities. The engagement took place on September 28, 2026, in Mumbai.

The bank informed stock exchanges that it has successfully concluded the meeting with analysts and investors. This communication serves as the outcome of the earlier scheduled participation, filed under Regulation 30 read with Para A Part A of Schedule III of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

Forum Participation Details

The forum provided a platform for institutional investors and corporate leadership to interact. City Union Bank’s involvement highlights its ongoing engagement with the institutional investor community. The meeting with analysts offered a direct channel for communication with key market stakeholders.

This participation aligns with standard investor relations practices for listed entities seeking to maintain visibility among key market stakeholders. The bank's disclosure confirms the event's execution as planned.