Maruti Suzuki gets ₹13,000cr tax relief
What's the story
Maruti Suzuki has received a major tax relief from the Income Tax Appellate Tribunal (ITAT). The tribunal's order, covering eight financial years, is expected to have a positive tax impact of around ₹13,000 crore for the automaker. The ruling pertains to major issues related to FY2013-14 to FY2019-20 and FY2021-22.
Financial impact
Maruti Suzuki to reduce contingent liabilities
Maruti Suzuki plans to use the ITAT order to cut its contingent liabilities by around ₹6,300 crore. The reduction will mainly come from a decrease in the interest component.
However, it's important to note that this estimated tax benefit doesn't mean that the company has already received a cash refund.
Implementation plan
Company's financials not majorly impacted by ITAT ruling
Maruti Suzuki said it will file an application before the jurisdictional assessing officer to implement the tribunal's order.
The company stressed that this ruling won't have a major impact on its financials, operations, or other activities.
This comes as a relief for the automaker amid rising costs and declining profits in recent quarters.
Q1 FY27 results
Maruti Suzuki's Q1FY27 performance
In the first quarter of FY27, Maruti Suzuki reported a 36% year-on-year increase in revenue from operations to ₹52,456 crore.
However, its standalone net profit fell by 11% to ₹3,352 crore.
The company's operating EBITDA margin also narrowed to 8.22% from 10.4% a year earlier due to higher costs of commodities, energy, logistics, and raw materials.