Fusion Microfinance said the Income Tax (IT) Authorities have passed two orders directing it to make payment aggregating ₹27.80 crore, including interest.
The IT authorities passed the two orders (one for ₹16.62 crore and another for ₹11.18 crore) under section 201 of the Income Tax Act, 1961 for AY (assessment year) 2020-21, the microfinance institution said in an exchange filing.
The company said the alleged orders under section 201 of the Act pertain to the non-deduction/lower deduction of tax on interest payments made to foreign NCD (non-convertible debenture) holders, and it has been treated as “deemed to be an assessee in default.”
“It has been alleged that interest payment attracts tax withholding @20 per cent plus cess and surcharge u/s 196D read with section 115AD of the Act instead of tax already withheld @5% plus cess and surcharge under section 194LD of the Act,” per the filing.
Fusion Microfinance said it will contest the orders passed by the adjudicating authority by filing an appeal before the appropriate authority.
The company believes that it has adequate legal grounds to reasonably substantiate its position in this matter and does not expect any material impact on financial, operation or other activities of the company due to the said orders.