IIFL Home Finance Faces ₹963.39 Crore Income-Tax Demand After Block Assessment

IIFL Finance Limited has told the stock exchanges that its material subsidiary, IIFL Home Finance Limited, has received an income-tax assessment order raising a demand of ₹963.39 crore, including surcharge and cess. The order was received on 24 August 2026, and the company disclosed it on 25 August 2026 in a letter to BSE and NSE under Regulation 30 of the SEBI (LODR) Regulations, 2015.

The order was passed by the Assistant Commissioner of Income Tax, Central Circle 4(4), Mumbai, at the end of block assessment proceedings that followed search and seizure action. The block period disclosed by the company runs from 1 April 2018 to 3 February 2025.

What the assessment order covers

According to the filing, the demand was raised under section 158BC(1)(c) of the Income-tax Act, 1961. The whole block period falls before 1 April 2026, when the Income-tax Act, 2025 took effect, and the order was passed under the 1961 Act. The exchange letter names four principal additions and disallowances:

These are the underlying additions to income, not tax amounts. They should not be added together and compared with the demand. The tax demand itself is ₹963.39 crore, including surcharge and cess.

Why IIFL Home Finance disputes the additions

The company says the subsidiary has strong factual and legal grounds to contest the order. Its positions, as set out in the filing, are:

• ORC income and interest strip assets: the income has already been offered to tax, and the assessment does not give proper credit for the income or tax so offered.
• Section 36(1)(viii): the dispute turns on how the expression "general reserves" is read when working out the statutory limit for the deduction.
• ESOP expenses: the subsidiary disagrees with the treatment in the order and says its view is supported by the legal position it relies on.

The filing adds that several of these issues were examined in earlier scrutiny assessments. IIFL Home Finance is pursuing appeal, rectification and other remedies available under law. Based on its assessment of the merits and the advice it has received, it does not currently expect a material impact on its financial position or operations.

Stay on the parent's ₹475.56 crore demand

The same letter updates a separate matter concerning IIFL Finance itself. A block assessment order dated 12 May 2026 had raised a demand of ₹475.56 crore on the parent company. The Income Tax Authority has now stayed recovery of the outstanding demand until 31 December 2026 or disposal of the company's appeal before the Commissioner of Income Tax (Appeals), whichever is earlier.

The stay is conditional. IIFL Finance must pay ₹23.78 crore, equal to 5% of the disputed demand, in instalments up to 15 December 2026, and must comply with the other conditions in the stay order. It paid the first instalment of ₹5 crore on 13 August 2026.

What finance and tax teams should note

The ₹963.39 crore figure is a disputed assessment demand, not an admitted liability. Its final effect depends on the appeal and rectification proceedings and on any interim relief the subsidiary obtains. For auditors of the group, the disclosure is relevant to the assessment of contingent liabilities and to the evaluation of the 5% payment made against the parent's demand.

Keep the two matters apart when tracking them: the fresh demand is against IIFL Home Finance, while the ₹475.56 crore demand is against IIFL Finance and is already under a conditional stay. The issues involved (credit for income already offered to tax, the reserve-based limit under section 36(1)(viii), ESOP costs and block assessment after a search) are recurring disputes for housing finance companies and NBFCs, and later filings by the group will show how the appeals progress.

Updated on 27 September 2026: added the stock exchange filing as the source, corrected the ₹475.56 crore reference to the block assessment order dated 12 May 2026, and added the instalment deadline of 15 December 2026.