Polycab India has received significant relief in its income tax proceedings, with the company announcing a substantial reduction in its tax demand from the authorities.

Major Tax Demand Reduction

The electrical equipment manufacturer disclosed that its income tax demand has been reduced to ₹575.8 million from the earlier demand of ₹3.27 billion. This development represents a considerable decrease of approximately 82% in the company's tax liability.

Financial Impact

This substantial reduction in income tax demand provides significant financial relief to Polycab India. The decrease of approximately ₹2.69 billion in tax liability represents a positive development for the company's financial position and cash flow management.

Company Profile

Polycab India operates as a leading manufacturer of electrical equipment and solutions in the Indian market. The resolution of this tax matter removes a significant financial uncertainty for the company and its stakeholders.

Polycab India Limited has received a significant update regarding its income tax assessment matter, with the demand amount substantially reduced following a rectification order. The company disclosed this positive development to stock exchanges, showing progress in resolving the tax dispute that initially involved Rs 327.45 crore.

Original Assessment and Rectification Process

The Office of the Deputy Commissioner of Income-Tax, Mumbai had initially issued an assessment order under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2024-25, relevant to Financial Year 2023-24. The original order contained disallowances and additions aggregating to Rs 41.87 crore but resulted in a disproportionately high demand of Rs 327.45 crore due to computational and clerical errors.

Successful Rectification Outcome

Following the company's rectification application under Section 154 of the Income Tax Act to correct computational and clerical errors, the Income Tax Authority issued a rectification order. This resulted in the aggregate income tax demand being substantially reduced to Rs 57.58 crore from the original Rs 327.45 crore, representing a reduction of Rs 269.87 crore.

Further Action Plan

Despite the significant reduction, Polycab India, in consultation with its tax advisors, believes the revised demand of Rs 57.58 crore is still due to certain issues, particularly the non-granting of advance tax credit. The company has identified this as rectifiable under Section 154 of the Act and has initiated the process for filing another rectification application before the jurisdictional Assessing Officer.

Company's Legal Strategy

The company maintains its position that the tax demand raised pursuant to the assessment order is not sustainable in law, based on advice from its tax consultants. Polycab India is proceeding with filing an appeal against the additions made in the assessment order under applicable provisions of the Income Tax Act, 1961.

Financial Impact Assessment

Polycab India has stated that it does not expect any material impact on its financial position or operations due to this assessment order. This disclosure represents a continuation of the company's earlier communications to exchanges, demonstrating ongoing resolution efforts through prescribed legal channels.