Why did this company get a Rs 384 crore income tax notice despite just Rs 140 crore Q3 profit?

​In an exchange disclosure, Digit said it has received an income tax demand of Rs 384, including an interest of Rs 100 crore, for the year 2023-24.

​Why is tax demanded?

As per the exchange disclosure by the company, the income tax is demanded because the authorities have raised the total taxable income of the company. The authorities said that the taxable income of the company has increased because of-

i) disallowance of provision of claims Incurred But Not Reported and claims Incurred But Not Enough Reported, ii) disallowance under Section 40(a)(ia) of the Act for non-deduction of TDS on certain expenses, and iii) disallowance under Section 40(a)(i) of the Act for non-deduction of TDS on reinsurance premium paid to non-resident insurance companies.

​What next for Digit?

Digit said in the exchange filing that these disallowances are primarily related to industrywide issues.  The company said that while there is no financial impact at this stage, it has consulted with its tax advisor.

​Digit said that, based on the advice from its tax advisors, it would pursue an appeal with the Appellate Authorities and evaluate other legal options against the tax demand order by the Mumbai tax authorities.

​Tax notice from Chennai authorities

Earlier this month, Digit received a GST demand of Rs 170 crore from the Office of the Commissioner of GST & Central Excise, Chennai. The company originally received the notice in July 2025. Thereafter, it appealed in the Bombay High Court against the order. The court had set aside the GST demand and directed the tax authorities to re-evaluate it. In its reevaluation, Chennai GST authorities reaffirmed the original GST demand of Rs 170 crore.

​The matter is still pending as the company has decided to appeal to higher authorities against the order.