Public sector lender Indian Overseas Bank (IOB) has been served a demand notice of ₹559 crore by the Income Tax Department, the bank disclosed in a regulatory filing on Tuesday. The notice, issued under Section 156 of the Income Tax Act, 1961, stems from certain disallowances and additions flagged during the financial year 2022–23 (Assessment Year 2023–24).
In its filing to the stock exchanges, IOB clarified that the demand was raised by the department’s assessment unit on March 25. While the specifics of the disallowances have not been publicly disclosed, such notices typically relate to discrepancies in deductions, exemptions, or tax treatment of income and expenditure.
The Chennai-headquartered bank is currently filing an appeal before the appropriate appellate authority. “Based on judicial precedents and favourable rulings from appellate authorities in similar cases, the bank believes it has strong factual and legal grounds to contest the notice,” IOB said in its statement.
Emphasizing its confidence in the matter, the bank added that it expects the entire demand to be eventually quashed or substantially reduced. “Considering the relief anticipated, the entire demand is likely to subside,” the statement noted.
The bank also assured stakeholders that the notice has had no material impact on its financial health or day-to-day operations. “There is no effect on the financial, operational or other activities of the bank arising out of this demand,” the filing read.
IOB, which is majority-owned by the Government of India, has been undergoing a financial turnaround over the past few years. It recently reported improved asset quality and consistent profitability after several quarters of restructuring and capital infusion.
Tax demand notices of this scale often lead to investor concern, particularly in the case of public sector banks. However, experts note that such disputes are not uncommon and can take years to reach final resolution.
The bank’s shares closed marginally lower on Tuesday following the announcement.
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