Mphasis has received a significant tax demand order amounting to ₹151.73 crore for the assessment year 2020-21. The order, issued under sections 201 and 201(1A) of the Income Tax Act, 1961, was accompanied by a notice of demand under section 156 of the same act. This development was communicated to the company on 30 March 2026 by the Office of the Deputy Commissioner of Income Tax, International Tax, Circle 1(1), Bangalore.
The scrutiny of Mphasis‘ case for the assessment year 2020-21 was conducted under section 133(6) of the Income Tax Act. The primary issue highlighted in the order pertains to the demand for tax deducted at source (TDS) on payments made to foreign associated enterprises, along with the interest accrued on these payments.
Despite the substantial demand, Mphasis’ management remains confident that the claims are not maintainable against the company. The company asserts that there will be no material financial impact as the core issue of non-deductibility of tax on similar overseas payments has seen favourable precedents in previous assessment years for other entities in the industry.
Mphasis is currently evaluating its legal options and intends to file an appropriate appeal against the demand order. The company believes it has a strong case on merits and is optimistic about a favourable outcome at the appellate stage.
The order did not impose any penalties, restrictions, or sanctions on Mphasis. The company has identified the demand as relating to tax deductible at source on payments for subcontracting charges to overseas subsidiaries and associated enterprises.
Disclaimer: This article is based on a regulatory filing submitted to the National Stock Exchange of India (NSE).