Shriram Finance 's Co Managing Director has reported a notable slowdown in specific segments of the Micro, Small and Medium Enterprises (MSME) sector. The slowdown has been directly attributed to ongoing tariff uncertainty, which is creating challenges for businesses operating in these segments.

Impact on MSME Segments

The tariff uncertainty appears to be affecting particular areas within the MSME sector, though the specific segments experiencing the slowdown have been identified by the company's leadership. This development suggests that trade policy uncertainties are having a tangible impact on business confidence and operations in these sectors.

Business Environment Challenges

The reported slowdown reflects broader challenges in the current business environment, where policy uncertainties can significantly impact smaller enterprises. MSME businesses, which form a crucial part of India's economic ecosystem, are often more vulnerable to such uncertainties due to their limited resources and flexibility compared to larger corporations.

Company Perspective

Shriram Finance's Co MD's observations provide insight into the ground-level impact of tariff-related uncertainties on the financial services sector. As a major player in the NBFC space, the company's assessment of MSME segment performance serves as an important indicator of broader market conditions affecting small and medium enterprises.

Shriram Finance Limited has received a significant penalty order from tax authorities related to Goods and Services Tax (GST) violations for the financial year 2019-20. The company disclosed this development to stock exchanges on January 23, 2026, as part of its regulatory compliance obligations.

Penalty Details and Authority

The Commercial Tax Officer, Chennai South, Tamil Nadu issued the penalty order on January 23, 2026, imposing a total penalty of ₹24,06,19,502. This action was taken under Section 74 of the Central Goods and Service Tax Act, 2017, read with the Tamil Nadu Goods and Service Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017.

Nature of Violations

The penalty stems from violations committed by erstwhile Shriram City Union Finance Limited, which was amalgamated with Shriram Finance effective April 1, 2022. The specific violations identified by the tax authorities include:

• Disallowance of input tax credit taken on payment of Reverse Charge Mechanism (RCM)
• Excess input tax credit claimed in GSTR-3B returns
• Issues related to credit notes issued

The total demand comprises the tax amount of ₹24,06,19,502, interest of ₹12,01,51,803, and an equal penalty amount of ₹24,06,19,502.

Company's Response and Impact Assessment

Shriram Finance has stated that there is no material impact on the company's financial, operational, or other activities due to this penalty order. The company has identified arithmetical mistakes in the order and plans to take corrective action.

The company intends to file a rectification application under Section 161 of the CGST Act, 2017 before the concerned officer. This action will be taken after consultation with tax consultants to address the arithmetical and clerical mistakes identified in the penalty order.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company provided detailed information as required under the relevant SEBI circulars, ensuring transparency with stakeholders regarding this significant regulatory development.

This penalty relates to the pre-amalgamation period of Shriram City Union Finance Limited and represents a legacy issue that the company is addressing through appropriate legal channels.