IndiGo hit with ₹944 crore tax penalty, calls it ‘erroneous and frivolous’, vows legal fight

InterGlobe Aviation Ltd, the parent company of budget airline IndiGo, has been slapped with a ₹944.20 crore penalty by the Income Tax Department for the Assessment Year 2021-22. The company, however, has strongly refuted the order, calling it "erroneous and frivolous" and vowing to challenge it through legal means.

According to IndiGo, the penalty was imposed due to a misunderstanding by the tax authorities, who incorrectly assumed that an appeal filed by the company before the Commissioner of Income Tax (Appeals) had been dismissed. The airline clarified that the appeal remains active and is yet to be adjudicated. The company further stated that the tax order would have no material impact on its financial stability, operations, or future growth.

IndiGo emphasized its confidence in the judicial system, asserting that the penalty lacks legal merit. "The company strongly believes that the order passed by the Income Tax Authority is not in accordance with law and is erroneous and frivolous. Accordingly, the company will contest the same and shall take appropriate legal remedies against the aforesaid order," IndiGo said in its official statement.

Following the news of the penalty, IndiGo’s stock took a minor hit, closing 0.32% lower at ₹5,113. However, despite this slight dip, the airline’s stock has surged by 11.36% on a year-to-date basis. The company's financial health remains robust, driven by expansion plans and positive investor sentiment.

IndiGo's strong market position has been a key factor in its resilience. The airline has been actively expanding its fleet and routes, capitalizing on India's growing demand for air travel. Analysts believe that while the tax dispute may create temporary headwinds, it is unlikely to derail IndiGo’s long-term trajectory.

As of December 2024, IndiGo’s promoters held a 49.27% stake in the airline. With legal proceedings expected to unfold in the coming months, the company remains focused on its operational efficiency and strategic growth initiatives.