RBL Bank Receives ₹104-Crore GST Demand Notice Over Input Tax Credit

MUMBAI — RBL Bank announced on Friday that it has received a tax demand notice amounting to ₹103.76 crore regarding an alleged short payment of Goods and Services Tax (GST).

According to a regulatory filing by the lender, the show cause notice (SCN) was issued on August 27, 2026, under Section 74 of the Maharashtra Goods and Services Tax Act, 2017, by the Assistant Commissioner of State Tax-Mumbai.

The regulatory filing noted that the proposed GST demand of ₹103.76 crore includes both applicable interest and penalties. The demand pertains to the financial year 2020-21 and focuses on the input tax credit availed by the bank under a separate GST registration obtained specifically for its digital banking business vertical.

RBL Bank stated that it will submit its formal response to the show cause notice within the prescribed timelines.

Commenting on the financial implications, the bank indicated that it does not expect the matter to have a material adverse impact on its ongoing operations or financial position at this stage. This assessment is based on a review of the case, which includes favourable orders previously received from GST authorities on identical issues for the financial years 2019 and 2020. Consequently, the bank believes it has adequate grounds to contest the notice on its merits.

"Tax disputes involving input tax credit for distinct business verticals are becoming increasingly common as regulatory scrutiny evolves. For established financial institutions, receiving a show cause notice requires a structured legal approach rather than immediate financial provisioning, especially when precedent exists. RBL Bank's reliance on favourable orders from earlier financial years provides a strong legal foundation to contest the demand. Startups and growing enterprises must similarly maintain meticulous documentation across all separate business registrations and compliance verticals to navigate similar regulatory inquiries effectively." — Dr. Shishir Gupta, Founder & CEO, StartupLanes