Shriram Finance Receives ₹27.71 Lakh GST Penalty Order from Uttar Pradesh Tax Authorities

Shriram Finance Limited has received a penalty order from Uttar Pradesh tax authorities related to GST violations by its erstwhile subsidiary. The company informed stock exchanges about the regulatory development on December 17, 2025, in compliance with listing obligations.

GST Penalty Details

The Office of the Deputy Commissioner, State Tax, Lucknow, Uttar Pradesh, issued the order dated December 16, 2025, imposing penalties under Section 73 of the Central Goods and Service Tax Act, 2017, read with the Integrated Goods and Services Tax Act, 2017.

Component	Amount
Tax Demand	₹2.77 crore
Interest	₹1.89 crore
Penalty	₹27.71 lakh
Total Demand	₹6.93 crore

The penalties relate to show cause cum demand notices against erstwhile Shriram City Union Finance Limited, which was amalgamated with Shriram Finance effective April 1, 2022.

Nature of Violations

The GST demand has arisen on account of multiple contraventions identified by the tax authorities:

Short payment of GST due to difference in applicable tax rate on scrap sale
Non-payment of GST under reverse charge on incentives paid to recovery employees
Availment of ineligible Input Tax Credit (ITC) under the provisions of Section 17 of the GST laws
ITC booked in FY2020-21 but claimed in FY2021-22
Non-submission of supporting/sample invoices corresponding to inward supplies as disclosed in Table 8A of GSTR-9
GST demand on payments made to individual Direct Selling Agents (DSAs) on which tax was not discharged under the Reverse Charge Mechanism

Company's Response and Impact Assessment

Shriram Finance has stated that there are no material impacts on the company's financial, operational, or other activities. However, based on the quantum of the amount involved and out of commercial prudence, the company is awaiting an opinion from its tax consultant against the Uttar Pradesh state demand order.

Parameter	Details
Order Reference	ZD0912252909802
Order Date	December 16, 2025
Receipt Date	December 17, 2025
Issuing Authority	Deputy Commissioner of State Tax, Lucknow, UP

The company has fulfilled its regulatory disclosure obligations by informing BSE Limited and National Stock Exchange of India Limited about the penalty order in accordance with Regulation 30 of the SEBI Listing Regulations.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-4.18%	-10.34%	-15.65%	+49.50%	+35.03%	+233.82%

Shriram Finance has announced that its board of directors will convene a meeting on December 19, 2025, to discuss potential fundraising opportunities. The meeting represents a strategic initiative by the financial services company to explore capital raising options through equity or securities offerings.

Board Meeting Details

The scheduled board meeting will focus on evaluating fundraising mechanisms through equity or securities offerings. This announcement indicates the company's proactive approach to capital management and potential expansion of its financial resources.

Meeting Details	Information
Date	December 19, 2025
Purpose	Fundraising Discussion
Method	Equity or Securities
Decision Body	Board of Directors

Strategic Implications

The board's decision to explore fundraising options reflects Shriram Finance's strategic planning for future growth and capital requirements. The consideration of both equity and securities offerings provides the company with multiple avenues to strengthen its financial position.

The meeting will allow the board to assess various funding mechanisms and determine the most suitable approach for the company's capital needs. This deliberation process demonstrates the company's commitment to maintaining a robust financial foundation while exploring growth opportunities.