Mphasis Limited has received a significant income tax demand notice of ₹151.73 crores from the Income Tax Department for assessment year 2020-21. The IT services company disclosed this development through a regulatory filing under SEBI Listing Regulations on March 30, 2026.

Tax Demand Details

The company received an order under sections 201 and 201(1A) of the Income Tax Act, 1961, along with a notice of demand under section 156. The communication was received from the Office of the DCIT, International Tax, Circle 1(1), Bangalore Income Tax Department.

Nature of Tax Dispute

The case was selected for scrutiny under section 133(6) of the Income Tax Act, 1961. The order primarily contains demand for TDS on overseas payments to foreign associated enterprises and interest thereon. The tax department has created demand on tax deductible at source on payment of subcontracting charges to overseas subsidiaries and associated enterprises.

Company's Response and Position

Mphasis management has expressed confidence in challenging the demand notice. The company believes the claims are not maintainable and expects no material financial impact. Key aspects of the company's position include:

• Management is confident there will be no material financial impact
• The core issue has favorable precedents in previous assessment years for other industry assessees
• The company has a good case on merits based on preliminary assessment
• Confidence in favorable outcome at the appellate stage

Legal Remedies and Next Steps

The company is currently evaluating its options to avail legal remedies and plans to file an appropriate appeal against the demand order. Notably, no penalty, restrictions, or sanctions have been imposed in the present order, which only pertains to the tax demand and associated interest.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The company has confirmed that all information provided is true, correct, and complete to the best of their knowledge and belief, in compliance with regulatory requirements.

Mphasis has successfully completed the first phase of a major technology modernization program with Flagstar Bank, marking a significant milestone after one year of collaboration. The partnership has delivered a next-generation data center and cloud platform, strengthened operational resilience, and improved performance for the regional bank.

Project Overview and Achievements

The modernization program addressed Flagstar Bank's need to consolidate six legacy data centers resulting from several recent acquisitions. As part of the bank's transformation into a leading regional bank, modernizing critical technology infrastructure was essential for future growth.

Strategic Impact and Benefits

The collaboration has created a scalable technology platform that supports Flagstar's evolving business needs while enabling future innovation across its digital banking environment. The modernization significantly improves disaster-recovery capabilities and strengthens operational resilience.

Chris Higgins, Executive Vice President, Chief Information and Operations Officer, Flagstar Bank, stated that the partnership advances Flagstar's Simple and Sophisticated (S2) platform initiative, representing a fundamental competitive advantage. The S2 platform creates technology architecture purpose-built around customer experience and designed for the next decade of growth.

Technical Transformation Details

The first phase involved comprehensive infrastructure modernization, with Mphasis working closely with Flagstar's technology team to achieve the consolidation timeline rarely seen for projects of this scale. The migration of hundreds of business-critical applications to the modern platform was completed without operational disruption.

Jason Pope, Executive Vice President, Chief Technology Officer, Flagstar Bank, emphasized that the transformation demonstrates the combination of deep engineering expertise with disciplined execution. The new platform enables teams to respond to evolving customer needs and market opportunities while maintaining uninterrupted banking operations.

Future Partnership Plans

Mphasis and Flagstar will continue their partnership by entering the next phase to modernize the bank's applications and operations. This upcoming phase will leverage AI and next-generation technologies while supporting Flagstar's future growth initiatives.

Rohit Jayachandran, Head of Banking & Financial Services, Mphasis, noted that the collaboration reflects a shared commitment to delivering meaningful outcomes through disciplined execution, helping establish a resilient infrastructure foundation that supports modernization while maintaining operational stability.

Company Background

Flagstar Bank operates as one of the largest regional banks in the country, headquartered in Hicksville, New York. As of December 31, 2025, the bank reported $87.50 billion in assets, $61.00 billion in loans, deposits of $66.00 billion, and total stockholders' equity of $8.10 billion, operating approximately 340 locations across ten states.