Swiggy Faces Rs 158.25 Cr Tax Demand, Plans to Appeal

Swiggy, a key player in India's retail and food delivery sector, is under scrutiny after receiving an assessment order from the Income Tax Department for unpaid dues amounting to Rs 158.25 crore. The tax demand pertains to the fiscal year 2022 and is linked to cancellation charges paid to merchants and interest income from an income tax refund.

“The company believes it has strong arguments against the order and is taking necessary steps to protect its interests through review/appeal. The company believes the order has no major adverse impact on its financials and operations,” Swiggy stated.

This is not the first time the company has received tax-related notices. Previously, the Income Tax Department issued notices for unpaid dues of Rs 1.1 crore related to cancellation charges paid to merchants in financial years 2018 and 2019. Swiggy had announced plans to appeal those assessments as well.

For the October-December 2024 period, Swiggy reported an operating revenue of Rs 3,993 crore, marking a 31 percent year-on-year increase. However, its net loss widened to Rs 799 crore from Rs 574 crore in the same period the previous year, primarily due to investments in its quick commerce business.

In addition to income tax issues, the company is also facing scrutiny over unpaid Goods and Services Tax (GST) of over Rs 327 crore. The GST notices relate to tax not paid on delivery fees charged to customers. Authorities have taken a similar stance against Swiggy’s competitor, Zomato, which received a demand notice for Rs 803 crore in December 2024. Both companies argue that the delivery fees are passed directly to gig workers, making them not liable for GST.

Swiggy, which went public in November 2024, has seen a 39 percent decline in its stock price year-to-date. Shares closed at Rs 331.5 on the BSE, up 0.5 percent, while the Sensex dropped 1.8 percent. The company's market capitalization stands at Rs 75,808 crore.

According to Trendlyne data, the average target price for Swiggy shares is Rs 508, indicating a potential upside of 53 percent from current levels. The consensus recommendation from 18 analysts remains a 'Buy.'