Shriram Finance Limited has received penalty orders from Tamil Nadu tax authorities totaling ₹1.56 crore for GST violations related to its erstwhile subsidiary. The company informed stock exchanges on January 28, 2026, about the penalties imposed by the Commercial Tax Officer, Chennai South, Tamil Nadu, under Regulation 30 of SEBI listing regulations.

Penalty Details and Breakdown

The penalties were imposed through an order dated January 27, 2026, covering two financial years related to erstwhile Shriram City Union Finance Limited, which was amalgamated with Shriram Finance effective April 1, 2022.

Nature of GST Violations

The penalties were imposed 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. The violations identified by tax authorities include:

• Disallowance of input tax credit taken on payment of Reverse Charge Mechanism (RCM)
• Credit note issues for both financial years

Both financial years faced identical violation categories, with the tax demand and penalty amounts being equal for each respective year.

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 these penalty orders. However, the company has adopted a cautious approach given the quantum of amounts involved.

Regulatory Compliance and Next Steps

The company has fulfilled its disclosure obligations under SEBI regulations by promptly informing both BSE Limited and National Stock Exchange of India Limited about the penalty orders. Out of commercial prudence, Shriram Finance is awaiting opinion from its tax consultant regarding the Tamil Nadu state demand orders before determining its course of action.

The penalty orders relate to the pre-amalgamation period of Shriram City Union Finance Limited, highlighting the ongoing compliance obligations that companies face even after corporate restructuring events.

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.