Tamilnad Mercantile Bank Limited has received a significant income tax demand notice from the Assessment Unit of the Income Tax Department, amounting to Rs 17,75,40,410. The bank disclosed this development to the stock exchanges under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Tax Demand Details

The Assessment Unit issued the demand notice under Section 156 of the Income Tax Act, 1961, through Notice no. ITBA/AST/S/156/2025-26/1088161097(1) dated March 30, 2026. The bank received this notice on March 31, 2026.

Nature of Assessment

The Assessment Unit passed an order dated March 30, 2026, under section 143(3) read with section 254 and section 144B of the Income Tax Act. The demand arose from the disallowance of the bank's claim made under Section 36(1)(viia) of the Income Tax Act, 1961 for Assessment Year 2016-17.

Bank's Response and Impact

Tamilnad Mercantile Bank has indicated that it is in the process of filing an appeal against this demand notice. The bank expressed confidence that the appeal is expected to be decided in its favor.

According to the bank's disclosure, this demand notice would not have a material impact on the bank's financial statements. The bank has fulfilled its regulatory disclosure requirements as mandated under SEBI regulations for such monetary demands from regulatory authorities.

Regulatory Compliance

The disclosure was made in compliance with Regulation 30 read with Schedule III - Para A (20) of Part A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI Circular No. SEBI/HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026. The bank provided comprehensive details about the nature of the demand, the authority involved, and the potential impact on its operations as required under the regulatory framework.

Tamilnad mercantile bank Limited has disclosed receiving a significant monetary demand notice from the Income Tax Department, highlighting regulatory challenges faced by the banking institution.

Income Tax Demand Details

The Assessment Unit of the Income Tax Department issued a Notice of Demand under Section 156 of the Income Tax Act, 1961, dated March 30, 2026. The demand notice, numbered ITBA/AST/S/156/2025-26/1088126807(1), seeks payment of Rs 5,36,62,680 from the bank.

Nature of Disallowance

The Income Tax Department's order dated March 30, 2026, was issued under Section 143(3) read with Section 144B of the Income Tax Act. The demand arose from disallowances made under Section 14A read with Rule 8D of the Income Tax Act, 1961, specifically for Assessment Year 2024-25.

Section 14A typically relates to expenditure incurred in relation to income that does not form part of total income, while Rule 8D provides the mechanism for computing such disallowances when the assessing officer is not satisfied with the claim made by the assessee.

Bank's Response and Expected Impact

Tamilnad Mercantile Bank has outlined its strategy to address the demand notice. The bank stated it is in the process of filing an appeal against the Income Tax Department's order and expects the appeal to be decided in its favor.

Regulatory Compliance

The disclosure was made under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The bank provided comprehensive details as required under Schedule III - Para A (20) of Part A, ensuring full transparency with stakeholders regarding the regulatory development.

Company Secretary and Compliance Officer Swapnil Yelgaonkar signed the disclosure document, emphasizing the bank's commitment to maintaining proper corporate governance standards and timely regulatory reporting.