Shriram Finance faces ₹2.77m penalty in tax dispute

Shriram Finance Limited today announced it received an order dated December 16, 2025, from the deputy commissioner of state tax in Lucknow, Uttar Pradesh. The order levies penalties of ₹2,770,732, stemming from show cause cum demand notices against the erstwhile Shriram City Union Finance Limited, which merged with Shriram Finance on April 1, 2022. Penalties are imposed under Section 73 of the Central Goods and Service Tax Act, 2017, read with the Integrated Goods and Services Tax Act, 2017.

The tax demand, totaling ₹27,707,316, along with interest of ₹18,856,157 and the penalty, is related to alleged violations. These include short payment of GST on scrap sales, non-payment of GST under reverse charge on incentives to recovery employees, and availment of ineligible input tax credit (ITC). Discrepancies in ITC booking and claims between fiscal years, non-submission of supporting invoices, and GST not discharged under the reverse charge mechanism on payments to individual Direct Selling Agents were also cited.

Shriram Finance states there is no material impact on its financial, operational, or other activities. However, due to the amount involved, the company is awaiting an opinion from its tax consultant regarding the Uttar Pradesh state demand order.