Equitas Small Finance Bank has received a show cause notice from GST authorities demanding ₹533.81 crore for financial year 2022-23. The notice proposes disallowance of exemption on interest income amounting to ₹479.33 crore.

Notice details and components

The notice was issued by the Office of the Deputy Commissioner (ST), Central-III Zone, Commercial Taxes Department, Government of Tamil Nadu. It was received on September 21, 2026, under Section 73 of the Central Goods and Services Tax Act, 2017 and the Tamil Nadu Goods and Services Tax Act, 2017.

The aggregate demand comprises tax, interest, and penalty components as detailed below:

Bank's legal position

Equitas Small Finance Bank stated that it believes it has substantive factual and legal grounds to contest the notice. The bank argues that interest or discount on deposits, loans, or advances is specifically exempt under Entry 27(a) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017. This exemption applies except for interest involved in credit card services.

The bank noted that it has consistently applied this statutory treatment. Furthermore, relevant assessments for prior years were completed without treating such exempt interest income as taxable turnover. The bank is examining all matters raised and will submit a detailed response with reconciliations within the prescribed timeline.

Nature of the dispute

The show cause notice inter alia proposes tax regarding several issues beyond the primary interest income dispute. These include:

• Short payment of tax on outward supplies
• Difference in turnover described as suppressed turnover
• Short payment under reverse charge
• Credit notes and inter-State branch transfers
• Rate differences and excess Input Tax Credit (ITC)
• ITC identified as ineligible

The bank clarified that the notice is at the show-cause stage and represents the position proposed by the authority. It does not constitute a final adjudication or a crystallised liability. The financial impact, if any, depends on the outcome of the proceedings and cannot presently be determined.

Equitas Small Finance Bank will host a non-deal roadshow with investors and analysts on September 21, 2026. The event aims to engage existing and prospective stakeholders regarding the bank's performance and outlook.

The meetings are scheduled to take place in Mumbai from 10:00 am to 4:00 pm. Kotak Securities Limited has been appointed as the organizer for these one-to-one interactions. The bank emphasized that no unpublished price-sensitive information will be shared during the sessions.

Event Details

The schedule remains subject to change based on investor or analyst exigencies. A presentation for the roadshow is available on the bank's website, covering Q1FY27 data.

This disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Natarajan Ramanathan, Company Secretary, signed the intimation on September 16, 2026.