IndiGo Slapped with ₹944 Crore Tax Penalty, Calls Order ‘Erroneous and Frivolous’

InterGlobe Aviation, the parent entity of IndiGo, has been slapped with a fine of ₹944.20 crore by the Income Tax Department for the assessment year 2021-22. But the airline has rejected the order as "erroneous and frivolous."

According to IndiGo, the penalty was levied by the Assessment Unit of the Income Tax Department and an extra fine of ₹2.84 crore was charged by the Chennai Joint Commissioner. The problem lies in the rejection of input tax credit on the grounds of discrepancy in financial statements between fiscal years 2018 to 2020.

In a formal statement, IndiGo elaborated, "The order has been passed on a wrong presumption that the company's appeal pending before the Commissioner of Income Tax (Appeals) (CIT(A)) against the assessment order under Section 143(3) has been rejected, while it is still pending and under consideration."

Reiterating its position, the airline stressed that the order of penalty is not legally sustainable and guaranteed to appeal the ruling through proper legal recourse. IndiGo also stated that the penalty will not have any "material impact on the company's financials, operations, or other activities."

This is not the first instance of IndiGo incurring tax-related fines. On February 5, InterGlobe Aviation reported receiving GST demand orders worth ₹116 crore from tax authorities in Chennai and Delhi. The Additional Commissioner in Delhi issued a ₹113 crore fine, mainly regarding the treatment of services rendered to overseas clients as taxable instead of export of services.

For a second time, on January 15, Customs Department imposed over ₹25 lakh fine on IndiGo regarding customs duty on jet fuel, for which the order was made by the Joint Commissioner (Customs) in Ludhiana related to additional duty on residual Aviation Turbine Fuel (ATF). Moreover, the Principal Commissioner of Customs for the Air Cargo Complex (Import) had already imposed a fine of ₹2.17 crore on January 6 after canceling a duty exemption on foreign aircraft spares.

In spite of such regular tax litigations, IndiGo has insisted that the said penalties "have no material impact" on its financial well-being, operation, or business activities in general.