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.

Shriram Finance has announced that its board of directors has approved a strategic plan to raise funds through debt securities issuance. The approval establishes a clear framework for the company's upcoming fundraising activities.

Fundraising Timeline and Structure

The board-approved plan outlines a specific execution period for the debt securities issuance. The following timeline has been established for the fundraising initiative:

Strategic Capital Planning

The approval of this debt fundraising plan demonstrates Shriram Finance's proactive approach to capital management. By establishing a defined timeframe well in advance, the company is positioning itself to execute its fundraising strategy efficiently when market conditions are favorable.

The three-month window from February to April 2026 provides the company with flexibility to optimize timing and market conditions for the debt securities issuance. This structured approach allows for careful planning and execution of the fundraising activities.

Corporate Governance and Decision Making

The board's approval of this fundraising plan reflects the company's commitment to transparent corporate governance and strategic financial planning. By securing board approval in advance, Shriram Finance ensures proper oversight and authorization for its future capital raising activities.

This decision underscores the importance of advance planning in corporate finance, allowing the company to prepare necessary documentation and regulatory approvals well ahead of the proposed fundraising timeline.