Shriram Finance Receives ₹13.04 Crore GST Penalty Order for FY 2018-19 Violations
Shriram Finance Limited has received a penalty order of ₹13,03,53,551 from Commercial Tax Officer, Chennai South for FY 2018-19 GST violations. The violations include input tax credit issues, excess claims in GSTR-3B, and GST on leasehold improvements, related to erstwhile Shriram City Union Finance Limited. The total demand including tax, interest, and penalty amounts to ₹41.80 crores. The company states no material operational impact and is seeking tax consultant opinion on the matter.
*this image is generated using AI for illustrative purposes only.
Shriram Finance Limited has received a significant penalty order from tax authorities related to GST violations dating back to FY 2018-19. The company disclosed this development through a regulatory filing under SEBI's listing regulations on December 31, 2025.
Penalty Details and Authority
The Commercial Tax Officer, Chennai South, Tamil Nadu issued the penalty order dated December 30, 2025, imposing a penalty of ₹13,03,53,551.00 for FY 2018-19. The penalty has been levied 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.
| Parameter: | Details |
|---|---|
| Penalty Amount: | ₹13,03,53,551.00 |
| Authority: | Commercial Tax Officer, Chennai South |
| Order Date: | December 30, 2025 |
| Applicable Period: | FY 2018-19 |
| Legal Framework: | Section 74 of CGST Act, TNGST Act, IGST Act |
Nature of Violations
The penalty order addresses multiple GST-related violations that occurred during FY 2018-19. These violations pertain to the erstwhile Shriram City Union Finance Limited, which was amalgamated with Shriram Finance Limited effective April 1, 2022.
The specific violations identified 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
- GST implications on leasehold improvements
Total Financial Impact
The complete financial demand from the tax authorities extends beyond just the penalty amount. The total demand structure includes multiple components that significantly increase the overall liability.
| Component: | Amount (₹) |
|---|---|
| Tax Demand: | 13,03,53,551.00 |
| Interest: | 15,73,02,807.00 |
| Penalty: | 13,03,53,551.00 |
| Total Demand: | 41,80,09,909.00 |
Company's Response and Impact Assessment
Shriram Finance has indicated that there is no material impact on the company's financial, operational, or other activities from this penalty order. However, given the quantum of the amount involved, the company is exercising commercial prudence in its response approach.
The company is awaiting an opinion from its tax consultant regarding the Tamil Nadu state demand order reference number ZD331225453972B dated December 30, 2025. This suggests that the company may be considering legal or procedural options to address the penalty order.
Regulatory Compliance and Disclosure
The disclosure was made pursuant to Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The company received the order on December 30, 2025, and the copy was forwarded to the concerned officer on December 31, 2025, prompting the immediate regulatory disclosure.
This development highlights the ongoing scrutiny of GST compliance by tax authorities and the potential financial implications for companies, even for violations dating back several years. The case also demonstrates how corporate restructuring activities, such as amalgamations, can bring forward historical tax liabilities to the surviving entity.
Historical Stock Returns for Shriram Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.57% | +7.44% | +9.56% | +74.18% | +94.79% | +270.52% |
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