Ecommerce marketplace Meesho, which went public in December, has received a tax demand of nearly Rs 1,500 crore from the income tax department for allegedly under-reporting its income in the financial year 2022-23, according to a regulatory filing made with the stock exchanges.
Meesho said that it was evaluating the order and that the demand notice did not have any major adverse impact on its financials.
“As per the assessment order… the income tax department has made certain additions/adjustments to the income reported by the company,” Meesho said in its filing. The amount also includes interest on the unpaid taxes.
Large tax disputes for ecommerce marketplaces usually arise from a few recurring issues. While Meesho’s disclosure does not specify the exact adjustment, the most common reasons include such companies treating customer discounts and incentives as business expenses, thereby reducing taxable profits. Tax authorities have, in earlier cases, argued that some of these payments should not be fully deducted, or should be treated differently.
Meesho said it had earlier received a similar tax notice for fiscal 2022, which the company had challenged in court. In its IPO prospectus, the ecommerce platform disclosed that the income tax department issued a show-cause notice on January 25, 2025, for the assessment year 2022-23, asking the company to explain certain proposed adjustments to its tax filings. A financial year is the period in which income is earned (April-March), while the assessment year is the following year when that income is reviewed and taxed by the authorities.
These adjustments included the possible disallowance of some advertisement and communication expenses, the tax treatment of mark-to-market gains on forward contracts, and issues related to tax deducted at source (TDS) on certain foreign remittances. Meesho responded to the notice on February 7, 2025, submitting additional information and seeking a hearing.
However, on March 13 last year, the direct tax authority issued a series of orders — including an assessment order and demand notice — raising a tax demand of Rs 572 crore.
The company challenged these orders in the Karnataka High Court on April 9, arguing that the assessment was flawed and violated principles of natural justice. On April 17, the high court granted an interim stay on the tax demand, and the matter remains pending before the court.
“The company is currently evaluating the assessment order and does not concur with the observations and adjustments made…The company believes that it has adequate legal and factual grounds to contest the same and is taking necessary steps to protect its interest,” it said in the latest exchange filing.
Meesho reported a 13-fold jump in net losses for the October-December quarter, at Rs 491 crore, while operating revenue rose 31% to Rs 3,517 crore.
On Friday, Meesho’s shares closed at Rs 159.1, up 0.4% on the BSE.
Meesho said that it was evaluating the order and that the demand notice did not have any major adverse impact on its financials.
“As per the assessment order… the income tax department has made certain additions/adjustments to the income reported by the company,” Meesho said in its filing. The amount also includes interest on the unpaid taxes.
Large tax disputes for ecommerce marketplaces usually arise from a few recurring issues. While Meesho’s disclosure does not specify the exact adjustment, the most common reasons include such companies treating customer discounts and incentives as business expenses, thereby reducing taxable profits. Tax authorities have, in earlier cases, argued that some of these payments should not be fully deducted, or should be treated differently.
Meesho said it had earlier received a similar tax notice for fiscal 2022, which the company had challenged in court. In its IPO prospectus, the ecommerce platform disclosed that the income tax department issued a show-cause notice on January 25, 2025, for the assessment year 2022-23, asking the company to explain certain proposed adjustments to its tax filings. A financial year is the period in which income is earned (April-March), while the assessment year is the following year when that income is reviewed and taxed by the authorities.
These adjustments included the possible disallowance of some advertisement and communication expenses, the tax treatment of mark-to-market gains on forward contracts, and issues related to tax deducted at source (TDS) on certain foreign remittances. Meesho responded to the notice on February 7, 2025, submitting additional information and seeking a hearing.
However, on March 13 last year, the direct tax authority issued a series of orders — including an assessment order and demand notice — raising a tax demand of Rs 572 crore.
The company challenged these orders in the Karnataka High Court on April 9, arguing that the assessment was flawed and violated principles of natural justice. On April 17, the high court granted an interim stay on the tax demand, and the matter remains pending before the court.
“The company is currently evaluating the assessment order and does not concur with the observations and adjustments made…The company believes that it has adequate legal and factual grounds to contest the same and is taking necessary steps to protect its interest,” it said in the latest exchange filing.
Meesho reported a 13-fold jump in net losses for the October-December quarter, at Rs 491 crore, while operating revenue rose 31% to Rs 3,517 crore.
On Friday, Meesho’s shares closed at Rs 159.1, up 0.4% on the BSE.