Urban Company Limited has received an unfavorable ruling from the appellate authority regarding its GST appeal, with the Commissioner (Appeals-II) CGST and Central Excise, Mumbai rejecting the company's challenge against a tax demand of ₹7.30 crore. The company disclosed this development to stock exchanges on February 11, 2026, under Regulation 30 of SEBI LODR Regulations.

GST Demand Details and Timeline

The original GST demand order was passed on January 10, 2025, by the Joint Commissioner of CGST & CX, Mumbai (East), covering the period from July 2017 to March 2022. The appellate authority's rejection order was dated January 21, 2026, and received by the company on February 11, 2026, at 03:16 pm.

Nature of Tax Dispute

The GST demand relates to two primary issues concerning Urban Company's platform operations. The first involves the classification and rate of tax on services rendered through the UC platform under Section 9(5) of the CGST Act, 2017. The second concerns the taxability of convenience/platform fees from the Maharashtra registration.

Urban Company has been discharging GST at 5% under Section 9(5) of the CGST Act 2017 on payments made to service professionals providing housekeeping services. Additionally, the company has been discharging IGST at 18% on its convenience/platform fee from Haryana for consumers using the UC platform from the Maharashtra region.

Appellate Authority's Position

The Commissioner (Appeals-II) has taken the view that Urban Company should discharge tax at 18% on housekeeping services provided by service professionals through the UC platform, rather than the 5% rate the company has been applying. The authority has also determined that GST on convenience/platform fees for services availed in the Maharashtra region should be discharged in Maharashtra instead of Haryana, where it has already been paid.

Company's Response and Next Steps

Urban Company plans to file a further appeal against this order before the appropriate authority. The company has expressed confidence in its position, stating it believes it has a strong case on merits, supported by opinions from external legal and tax advisors.

Financial and Operational Impact

According to the company's disclosure, the appellate order will not have any impact on the financial, operational, or other activities of Urban Company. The total demand of ₹7,30,00,000 includes applicable interest and penalty as per the CGST Act, 2017, under Section 74.

The disclosure was made in compliance with SEBI Master Circular and Regulation 30 of SEBI LODR Regulations, with the information also being hosted on the company's investor relations website. Company Secretary and Compliance Officer Sonali Singh signed the disclosure on behalf of Urban Company Limited.

Urban Company Limited has issued a comprehensive postal ballot notice dated January 23, 2026, seeking shareholder approval for significant amendments to its Employee Stock Option Scheme 2015. The company has submitted the notice to both the National Stock Exchange of India Limited and BSE Limited under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

Key Resolutions for Shareholder Approval

The postal ballot encompasses four special resolutions that will reshape the company's employee stock option framework:

ESOP Pool Enhancement

The most significant proposal involves increasing the total quantum of options under the ESOP Scheme 2015 from 18,75,25,000 stock options to 20,33,00,000 stock options. This enhancement includes ungranted options from the ESOP Scheme 2022, which was closed on January 23, 2026, and a fresh top-up of 1,57,75,000 options. Out of the total ESOP pool of 20,33,00,000 stock options, 2,99,90,834 stock options will be available for grant to employees following the proposed amendments.

Trust Route Implementation

Urban Company proposes to transition from the direct route to the trust route for ESOP implementation through the Urban Company ESOP Trust. Under this new structure, the trust will acquire up to 13,07,03,828 fully paid-up equity shares of the company at INR 1 per share. The trust route offers greater administrative efficiency by issuing shares upfront to the trust rather than creating new shares each time employees exercise their options.

E-Voting Schedule and Process

The remote e-voting process will be facilitated by the National Securities Depository Limited (NSDL) with the following timeline:

Financial Authorization

The company seeks approval to provide interest-free loans to the Urban Company ESOP Trust to enable share acquisition for ESOP implementation. This financial assistance will be subject to the statutory ceiling of 5% of the paid-up capital and free reserves as prescribed under the SEBI Share Based Employee Benefits and Sweat Equity Regulations.

Compliance and Accessibility

In compliance with Ministry of Corporate Affairs circulars, the postal ballot notice is being distributed exclusively through electronic mode to members whose email addresses are registered with the company, registrar MUFG Intime India Private Limited, or depositories. The notice is accessible on multiple platforms including the company's investor relations website, NSDL's e-voting portal, and the websites of both stock exchanges.

Corporate Structure Details

Urban Company Limited, formerly known as UrbanClap Technologies India Limited and UrbanClap Technologies India Private Limited, operates from its registered office in New Delhi and corporate office in Gurugram. The company has appointed Mr. Devesh Kumar Vasishth and Mr. Parveen Kumar from DPV & Associates LLP as scrutinizers to ensure fair and transparent conduct of the postal ballot process.

The proposed amendments reflect the company's commitment to attracting and retaining talent through equity-based compensation while enhancing operational efficiency in ESOP administration. Shareholders eligible to vote as of the cut-off date will determine the future structure of the company's employee incentive programs through this comprehensive postal ballot process.