IIFL Finance shares drop 8% as IIFL Home Finance gets Rs 963 crore tax demand

Shares of IIFL Finance fell nearly 8% on Tuesday after the company and its core subsidiary, IIFL Home Finance, disclosed income tax assessment orders. IIFL Home Finance faces a tax demand of Rs 963.39 crore, including cess and surcharge.

According to a filing with the exchange on Tuesday, the demand relates to a block assessment covering the period from April 1, 2018 to February 3, 2025.

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The key additions and disallowances include around Rs 490 crore related to overriding commission income, Rs 392 crore in interest strip assets, Rs 305 crore under Section 36(1)(viii) and Rs 53 crore in ESOP expenses.

“The principal additions/ disallowances in the assessment order relate, inter alia, to overriding commission income (approximately Rs 490 crore), deduction claimed under section 36(1)(viii) of the Income Tax Act, 1961 (approximately Rs 305 crore), interest strip assets (approximately Rs 392 crore), and ESOP expenses (approximately Rs 53 crore),” the filing said.

IIFL Home Finance disputed the tax claims, stating that income related to overriding commission and interest strip assets had already been taxed. It also said the tax credit was not appropriately considered in the assessment and that the treatment of ESOP expenses was contrary to the legal position it had relied upon. The company is pursuing appellate and rectification remedies.

Separately, IIFL Finance has also secured a stay on the recovery of a separate Rs 475.56 crore tax demand that was disclosed by the company in May 2026. The stay is subject to payment of Rs 23.78 crore, equivalent to 5% of the disputed amount, in instalments by December 15, 2026. The company has already paid the first instalment of Rs 5 crore on August 13.

The company in the filing said that it is taking the necessary steps to comply with the conditions stipulated in the stay order and there is no material impact on the company’s business operations arising from this order.

Both IIFL Finance and IIFL Home Finance said they have strong cases on merits and do not expect the tax matters to have a material impact on their financial position or operations.

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IIFL Finance shares have gained 21% over the past month and 8.55% so far in 2026. The stock has risen 46.89% over the past year and nearly 148% over the last five years.

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