Muthoot Finance Limited has received a significant favorable ruling from GST authorities, with a rectification order completely eliminating a substantial tax demand and penalty that previously stood at Rs. 1,91,46,142.

GST Rectification Order Details

The Assistant Commissioner, Central Goods and Service Tax, Division I Noida, Uttar Pradesh, issued a rectification order dated March 24, 2026, which was received by the company on March 26, 2026. This order represents a complete reversal of the earlier tax demand and penalty, reducing the total amount from Rs. 1,91,46,142 to NIL.

Legal Proceedings and Resolution

The favorable rectification order was achieved following a writ petition filed by Muthoot Finance with the Hon'ble High Court of Judicature at Allahabad. This legal action proved successful in challenging the original GST demand and penalty imposed by the tax authorities.

Nature of Original Violations

The original GST demand was based on two specific allegations:

• ITC on Cancelled Registrations: Input Tax Credit claimed on supplies from entities whose registration was cancelled retrospectively, amounting to Rs. 95,70,326
• Ineligible ITC Claims: Input Tax Credit claimed on debit notes from suppliers who had not filed GSTR-3B returns, totaling Rs. 2,745

Financial Impact Assessment

The company has explicitly stated that there is no material impact on its financial, operational, or other activities resulting from this development. This rectification order effectively removes a potential financial liability that could have affected the company's financial position.

Regulatory Compliance

This disclosure has been made in compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI circular SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023. The company had previously intimated the stock exchanges about this matter on September 13, 2025, and this current disclosure serves as an update on the final resolution of the GST dispute.

Muthoot Finance delivered exceptional financial performance in Q3 FY26, marking a historic milestone with its standalone Assets Under Management (AUM) reaching INR50,000 crores. The achievement was driven by robust 50% year-on-year growth in the company's core gold loan portfolio, demonstrating strong market demand for collateralized lending solutions.

Record-Breaking Gold Loan Performance

The company's standalone gold loan portfolio achieved remarkable growth, reaching INR1,39,658 crores with an increase of INR36,700 crores over the 9-month period ended December 31, 2025. This performance aligns with accelerated demand for gold loans, particularly evident during the festive season.

Managing Director George Alexander Muthoot highlighted the increasing customer acceptance of gold loans as a convenient, trusted, and secure credit solution for a diverse customer base, including salaried individuals, self-employed professionals, and small business owners. The higher price of gold has further empowered customers to unlock greater value from their existing assets.

Subsidiary Performance and Diversification

Muthoot Finance's subsidiaries demonstrated strong operational performance across various business segments. Muthoot Home Loan, the company's 100% subsidiary, achieved an AUM of INR3,380 crores in 9 months, showing 24% year-on-year growth.

Belstar Microfinance, where Muthoot Finance holds a 66.13% stake, achieved a significant turnaround in Q3 with a profit after tax of INR51 crores, offsetting the H1 loss of INR160 crores. The loan AUM stood at INR7,911 crores with total revenue of INR1,312 crores for the 9 months.

Muthoot Money's Exceptional Growth

Muthoot Money, which became a wholly owned subsidiary in October 2018, delivered outstanding performance with its loan portfolio reaching INR8,003 crores compared to INR2,982 crores in the previous year, representing a 168% increase.

Interest Income and Recovery Performance

The company reported substantial interest income from legacy NPA recoveries during the quarter. Legacy NPA of approximately INR950 crores was closed by customers, while new NPA of INR342 crores was recorded, resulting in net NPA reduction of INR556 crores. The interest earned on legacy NPA minus derecognized NPA amounted to approximately INR500 crores.

Additionally, the company realized INR120 crores through auctions and INR24 crores from Asset Reconstruction Company (ARC) contributions, contributing to the overall interest income performance.

Regulatory Environment and Future Outlook

The Reserve Bank of India recently issued draft regulations that would allow branch opening without prior permission, addressing a long-standing request from the industry. This development is expected to provide significant operational flexibility for Muthoot Finance and its subsidiary Muthoot Money, which currently operates approximately 1,000 branches.

The company views this regulatory support as a positive step toward growing the gold loan business across India and helping the government put purchasing power in people's hands while monetizing idle gold assets. With nearly 5,000 branches under Muthoot Finance and about 1,000 branches under Muthoot Money, the company is well-positioned to capitalize on opportunities in the gold loan sector.

Risk Management and Asset Quality

Muthoot Finance maintains conservative lending practices with the current loan-to-value ratio at only 57% of the outstanding portfolio at current gold prices, well below the regulatory limit of 75%. This provides substantial margin for price volatility protection. The company's focus on gold ornaments, which carry making charges of 15-20%, provides additional security through higher replacement costs and sentimental value for customers.