Equitas Small Finance Bank has seen its proposed GST demand for financial year 2022-23 reduce significantly to ₹23.95 crore from the initial ₹533.81 crore. This revision follows a personal hearing held on September 25, 2026, and subsequent communication from the GST authorities dated September 28, 2026.

The initial show cause notice, received on September 21, 2026, had demanded ₹533.81 crore under Section 73 of the Central Goods and Services Tax Act, 2017 and the Tamil Nadu Goods and Services Tax Act, 2017. The notice was issued by the Office of the Deputy Commissioner (ST), Central-III Zone, Commercial Taxes Department, Government of Tamil Nadu.

Revised assessment details

Following the bank's submissions regarding interest income from loans and advances, the authorities substantially reduced the exemption-related turnover proposed to be assessed. The revised aggregate amount comprises tax, interest, and penalty components as detailed below:

The revised computation reflects that certain specified receipts and reconciliation items remain subject to verification of supporting documents. The bank believes that even the remaining amount is eligible for exemption.

Bank's legal position and next steps

Equitas Small Finance Bank stated that 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, except for interest involved in credit card services.

The bank noted that it has consistently applied this statutory treatment, and relevant assessments for prior years were completed without treating such exempt interest income as taxable turnover. The bank plans to produce further evidence and documents to the authorities to establish its position. Outcome of further progress will be informed in due course.

Nature of the dispute

The original show cause notice inter alia proposed tax regarding several issues beyond the primary interest income dispute. These included:

• 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 remains at the adjudication stage. It does not constitute a final crystallised liability. The financial impact, if any, depends on the outcome of the proceedings and cannot presently be determined.

Equitas Small Finance Bank announced the cessation of Prof. SamirKumar Barua as an Independent Director, effective from the close of business hours on September 22, 2026. The departure follows the natural conclusion of his appointed term.

The bank filed this disclosure with stock exchanges under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The filing confirms that Barua’s exit was consequent to the completion of his tenure as an Independent Director.

Director Details

The Board of Directors placed on record its appreciation for Barua’s contributions and guidance during his service. Key details regarding the change are outlined below:

Regulatory Compliance

This disclosure was made pursuant to Regulation 30 read with Schedule III of the SEBI (LODR) Regulations, 2015. It also adheres to SEBI Master Circular No. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026. The Company Secretary, N Ramanathan, signed the digital submission on behalf of the bank.