Two Tax Demands on March 27: This PSU Bank Faces Claims Larger Than Its Quarterly Profit

On Monday, March 30, 2026, the Indian Overseas Bank share price declined around 2 per cent to Rs 31.55, trading near its 52-week low as of 11:37 AM, in line with the broader market weakness. The banking space remained under pressure, with the Bank Nifty down 2.60 per cent at around 50,900 in early trade. While the bank has disclosed recent developments related to Tax demand notices received from the Income Tax Department, which it has stated it will contest.

Indian Overseas Bank has received two separate communications from the Income Tax Department, bringing tax demands across different assesSMEnt years, both of which the bank has indicated it will challenge.

In the first case, the bank received a Giving Effect order on March 26, 2026, from the Joint Commissioner of Income-tax, Chennai, following an earlier ruling by the Income Tax Appellate Tribunal. Along with this order, a tax demand of Rs 642.74 crore was raised for the Assessment Year 2016–17. The demand primarily arises from the recomputation of income and disallowances related to claims made in the bank’s tax filings. 

The bank has stated that it will contest the order before the appropriate appellate forum and, based on past precedents, expects the demand to subside without any financial impact. It also clarified that no penalty or sanction has been imposed.

In a separate development, the bank received another assessment order dated March 26, 2026, from the National Faceless Assessment Unit (NFAC), along with a higher tax demand of Rs 1,742.96 crore for the Assessment Year 2024–25. This demand is also linked to adjustments in income and disallowances in tax returns under the provisions of the Income Tax Act. 

Similar to the earlier case, the bank is in the process of filing an appeal within the prescribed timelines. It has expressed confidence in its legal position, stating that it expects the demand to be resolved in its favour, with no impact on its financial or operational position, and confirmed that no penalty or restriction has been imposed.

About Indian Overseas Bank

Indian Overseas Bank is a public sector bank headquartered in Chennai, Tamil Nadu, operating under the Government of India. The bank offers a wide range of banking and financial services, including retail banking, corporate banking, MSME lending and international banking, with a network of branches and ATMs spread across India and select overseas locations.

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Disclaimer: The article is for informational purposes only and not investment advice.