Mphasis Limited has been issued an assessment order along with a notice of demand amounting to ₹2,286.86 crores by the Income Tax Department for the Assessment Year 2023-24. The communication was received on March 25, 2026, and it stems from scrutiny under Section 143(3) read with Section 144B of the Income-Tax Act, 1961.
The assessment order outlines the income reported by Mphasis in its tax return and highlights variations identified by the assessing officer. Despite the substantial demand, Mphasis management believes there will be no material financial impact on the company. This confidence is based on precedents from jurisdictional High Courts and the fact that some of the proposed income variations are already pending in the Supreme Court. Additionally, Mphasis plans to file a Rectification Petition to address certain infirmities in the order’s computation.
The assessment has identified discrepancies such as allowances claimed on ESOP expenses, subcontractor expenses paid to overseas associated enterprises without tax deduction at source, and GST turnover differences compared to audited financial statements. However, no penalties or sanctions have been imposed in the communication.
In response, Mphasis intends to file a rectification petition to correct errors in the computation sheet and is considering legal remedies, including filing an appeal against the assessment order. The company remains optimistic about a favourable outcome at the appellate stage, based on its preliminary assessment.
Disclaimer: This article is based on a regulatory filing submitted to the National Stock Exchange of India (NSE).