Akzo Nobel India Limited has received a significantly reduced GST demand order from the Karnataka GST Department, marking substantial relief in an ongoing tax dispute for financial year 2018-19. The paints and coatings maker disclosed this development through a regulatory filing on January 1, providing an update on litigation proceedings under SEBI regulations.

Massive GST Demand Reduction

The Karnataka GST Department's final order shows a dramatic reduction in the demanded amount compared to the initial notice. The comparison reveals the extent of relief obtained by the company:

Background of the Tax Dispute

The tax dispute originated from a show cause notice issued by the Karnataka GST Department on June 27, 2025. The notice pertained to the disallowance of input tax credit under Section 74 of the CGST/SGST Act, 2017, covering the period from April 2018 to March 2019. The initial demand aggregated to ₹176.65 crores, representing a substantial financial exposure for the company.

Company's Response and Resolution

Akzo Nobel India had submitted its response along with supporting documents within the stipulated time limit following the show cause notice. The Assistant Commissioner of Commercial Taxes, LGSTO LTU, Large Taxpayers Unit, Bengaluru reviewed the company's submissions before issuing the final order dated December 30, 2025.

The company received this order on January 1, 2026. The substantial reduction from the initial demand of over ₹176 crores to approximately ₹41 lakhs indicates that the company's response and supporting documentation were largely successful in addressing the department's concerns.

Current Status and Next Steps

The company clarified that the order remains open for further submissions to the relevant authorities, and it is in the process of responding within the indicated timeframe. This suggests that Akzo Nobel India may seek further relief or clarification on the reduced demand.

The company confirmed that the matter does not involve litigation against key management personnel, promoters, or any ultimate person in control, and there has been no settlement of the proceedings as of this date. The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring transparency with stakeholders regarding material litigation updates.

Market Impact

Shares of Akzo Nobel India ended at ₹3,180.00, down by ₹2.70, or 0.08%, on the BSE following the announcement.

Akzo Nobel India Limited has received a GST demand order from the Telangana GST Department, escalating a tax dispute that began with a show cause notice issued in September 2025. The company disclosed this development to stock exchanges on January 1, 2026, under regulatory compliance requirements.

GST Demand Details

The Assistant Commissioner, Kukatpally CGST Division, Hyderabad issued the order on December 29, 2025, which the company received on January 1, 2026. The demand breakdown is as follows:

Background and Timeline

The dispute originated from a show cause notice issued by the Telangana GST Department on September 30, 2025, concerning the disallowance of input tax credit under Section 73 of the CGST/SGST Act, 2017. The notice covered the period from April 2021 to March 2022 and initially mentioned a demand of ₹40.86 lakh comprising tax, interest, and penalty as applicable.

The company had responded to the show cause notice along with supporting documents within the stipulated time limit. However, after reviewing the company's response, the GST department proceeded to issue the final demand order with an increased total amount due to the addition of specific penalty calculations.

Current Status and Next Steps

The order remains open for further submissions to the relevant authorities, and Akzo Nobel India is currently preparing its response within the indicated timeframe. The company has not disclosed any settlement discussions or the potential financial impact of this demand on its operations.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI circular dated July 13, 2023. This represents an update to the pending litigation that was initially disclosed on October 1, 2025, following the receipt of the original show cause notice.

The matter does not involve any litigation against key management personnel, promoters, or ultimate persons in control of the company. As the proceedings remain active, the company will continue to provide updates as required under regulatory guidelines until the dispute is resolved or litigation is concluded.