Swiggy's Tax Turmoil: A Closer Look

Bengaluru's leading food delivery platform, Swiggy, has recently been hit with a significant tax assessment order. The Income Tax Department's Central Circle in Bengaluru has added a whopping Rs 158.26 crore to Swiggy's taxable income for the financial year 2021-22. Swiggy has announced its intention to appeal the order, confident in its legal standing.

The Grounds of Dispute

The tax department's objections revolve around two main issues: the disallowance of cancellation charges paid to merchants under Section 37 of the Income Tax Act, 1961, and Swiggy's failure to report interest income earned on an income tax refund. This has led to an additional tax demand of Rs 158.26 crore.

Swiggy's Stance

Despite the hefty tax demand, Swiggy remains undeterred, stating that the order will not significantly impact its operations. The company is preparing to challenge the findings, emphasizing its strong legal arguments.

Broader Implications

This development highlights the increasing scrutiny by India's tax authorities on digital-first businesses, especially those in the platform economy with complex financial structures. Rival Zomato has also faced similar challenges, indicating a trend of regulatory hurdles for the sector.