Yes Bank Issued Rs. 244 Crore Tax Demand Following Rectification Order

Yes Bank has received an income tax demand notice of Rs. 244.20 crore for AY 2016–17. The April 15, 2025, notice came after a rectification order from the Jurisdictional Assessing Officer (JAO), who had raised the tax liability substantially by recomputing interest under Sections 234A and 234B of the Income Tax Act.

The bank’s assessment proceedings for FY 2016–17 started with an order of assessment in December 2018 with some disallowances and additions. A reassessment was done in March 2022 that was based on the income reported under the return incorrectly rather than the assessed income, hence leading to an erroneous calculation of tax. The recent rectification tried to undo the error but produced an enormously higher tax demand, which was found to be unjustified and without good reasons.

Responding to this, the bank intends to make a correction application to the JAO and is considering further legal recourse, such as an appeal before the first appellate authority. It has also contended that there are sufficient factual and legal reasons to question the demand and does not expect any material adverse effect on its business or financial activity.

Despite the warning about tax, the share price of the bank increased 3.02% and closed at Rs. 18.05 on April 16, 2025. The market capitalisation increased to Rs. 56,155 crore, which indicated the credibility of investors in the capability of the bank to handle the situation.

This comes after a previous tax demand of Rs. 2,209 crore for AY 2019–20 had also been challenged. The result of these hearings will be keenly observed by investors and stakeholders.