Regulatory Filing
Mastek Resubmits Disclosure on Income Tax Assessment Order; Faces ₹123.58 Crore Tax Additions for FY23
NSE
MASTEK
BSE
523704
Mastek Limited has resubmitted its disclosure to stock exchanges following a clarification sought by BSE regarding a delay in reporting a Final Assessment Order received from the Income Tax Department for FY 2022-23. The order involves total tax additions of ₹123.58 crore and initiation of penalty proceedings under Section 270A. The company has stated that it intends to challenge the assessment and currently does not expect any material financial impact.
PRICE-SENSITIVE TRIGGER
Event: Receipt of Final Assessment Order from the Income Tax Department and Resubmission of Exchange Disclosure
Type: Regulatory Filing / Tax Assessment Order
Impact: Negative
Immediate Effect: The Income Tax Department has proposed total additions of ₹123.58 crore to taxable income and initiated penalty proceedings. Mastek plans to file objections before appellate authorities and has stated that no material financial impact is currently anticipated.
Key Metrics:
- Transfer Pricing Addition: ₹90,95,38,080
- Addition under Domestic Tax Laws: ₹32,62,88,114
- Total Tax Addition: ₹1,23,58,26,194
- Financial Year: FY 2022-23
- Penalty Proceedings: Initiated under Section 270A of the Income Tax Act, 1961
- Date of Receipt of Order: May 30, 2026
Highlight:
- Total Tax Addition Proposed by Income Tax Department: ₹123.58 Crore
What Happened ?
Mastek Limited informed the stock exchanges that it has resubmitted its disclosure regarding a Final Assessment Order received from the Income Tax Department for FY 2022-23. The revised filing was made after BSE sought clarification on the delay in disclosure.
According to the company, the assessment order was received on May 30, 2026, which fell during a weekend. Mastek stated that it undertook a detailed review and verification process to assess the contents and implications of the order before making the public disclosure.
The assessment order includes transfer pricing adjustments and additions under domestic tax laws aggregating to ₹123.58 crore. The tax department has also initiated penalty proceedings under Section 270A.
Key Details
Assessment Order and Company’s Position:
- The authority issuing the order is the Income Tax Department.
- The assessment pertains to FY 2022-23.
- Transfer pricing adjustments of ₹90.95 crore have been proposed under Section 92CA(3) of the Income Tax Act, 1961.
- Additional income of ₹32.63 crore has been added under domestic tax laws.
- Aggregate tax additions proposed amount to ₹123.58 crore.
- Penalty proceedings under Section 270A have been initiated.
- The company received the assessment order on May 30, 2026.
- Mastek stated that certain errors exist in the computation sheet accompanying the assessment order.
- The company highlighted issues including higher tax computation, non-allowance of foreign tax credit, and non-grant of advance tax credit related to an amalgamated subsidiary.
- The company intends to file objections and responses before the Income Tax Appellate Authorities within prescribed timelines.
Note:
- The resubmission primarily addresses BSE’s query regarding the delay in disclosure. Mastek attributed the delay to the order being received during non-working days and the need for an internal review before public dissemination.
Risk Analysis
Summary:
- The assessment order creates regulatory and tax litigation exposure for the company. While management disputes the calculations and plans to pursue appellate remedies, the matter could remain subject to prolonged tax proceedings.
Key Risks:
- Potential tax liability arising from proposed additions.
- Ongoing penalty proceedings under Section 270A.
- Uncertainty associated with appellate outcomes.
- Possibility of prolonged litigation with tax authorities.
- Potential requirement for future provisions depending on legal developments.
Worst Case Scenario:
- If appellate authorities uphold the assessment and related penalties, Mastek may face a substantial tax outflow along with associated interest and penalty liabilities.
Risk Level: Medium
Company Commentary
- The company stated that the assessment computation sheet contains apparent errors and inconsistencies.
- Management believes the tax liability has been computed at a higher rate than warranted.
- Mastek highlighted non-allowance of foreign tax credit and non-grant of advance tax credit as key issues.
- The company intends to challenge the assessment before the appropriate appellate authorities.
- Management currently does not envisage any material impact on the company’s financials, operations, or business activities from the assessment order.
Official Exchange Filing: Mastek Limited