Synopsis
IndiGo, India's leading airline, is contesting a tax penalty of Rs 944.20 crore imposed by the Income Tax Department, labeling it erroneous. The airline's parent company, InterGlobe Aviation, plans to appeal the decision legally, stating that the ruling will not significantly impact its operations or finances.Key Takeaways
- IndiGo faces a Rs 944.20 crore tax penalty.
- The airline claims the ruling is erroneous.
- Legal action is being pursued against the penalty.
- IndiGo reports an 18.6% decline in Q3 profits.
- Operational costs rose by 20%.
Mumbai, March 30 (NationPress) The Income Tax Department has levied a penalty of Rs 944.20 crore on IndiGo, which is recognized as India's largest airline. The airline has labeled the ruling as erroneous and has committed to legally contest the decision.
The penalty notice was issued to IndiGo’s parent company, InterGlobe Aviation, on Saturday.
In a regulatory update released on Sunday, IndiGo clarified that the penalty relates to the assessment year 2021-22.
The company firmly asserts that the ruling does not align with the legal framework and has characterized it as frivolous and erroneous.
According to IndiGo’s statement, “The order has been made based on a flawed understanding that the appeal submitted by the company to the Commissioner of Income Tax (Appeals) (CIT(A)) regarding the assessment order under Section 143(3) has been rejected, while it is still active and awaiting review.”
IndiGo has confirmed its intention to pursue legal avenues to dispute the penalty. Despite this substantial fine, the airline has stated that the ruling will not significantly affect its financial health, operations, or overall business.
The company emphasized, “This order does not have any considerable impact on the financials, operations, or other activities of the company.”
The penalty arrives at a challenging time for IndiGo, which is already facing financial hurdles. The airline has recently reported an 18.6 percent drop in its consolidated net profit for the third quarter of FY25, with earnings declining to Rs 2,448.8 crore from Rs 2,998.1 crore a year earlier.
Increased operational costs, which rose by 20 percent to Rs 20,466 crore, were a significant factor contributing to the decrease in profitability.
Nonetheless, IndiGo maintains its status as a leading figure in the Indian aviation market. The Directorate General of Civil Aviation (DGCA) reported a 6.12 percent increase in domestic air passenger traffic in 2024, reaching 16.13 crore passengers, with IndiGo continuing to dominate the market with a share of 64.4 percent, far surpassing Air India’s 26.4 percent.
