NSE/BSE Codes: NSE: EQUITASBNK / BSE: 543243, 976218, 976979

Summary of Key Information:

Nature of Event / Disclosure:

Regulatory disclosure pursuant to SEBI Listing Regulations (Regulation 30) regarding the receipt of a Show Cause Notice (SCN) from GST Authorities.

Involved Parties / Authorities:

  • Issuing Authority: Office of the Deputy Commissioner (ST), Central-III Zone, Commercial Taxes Department, Government of Tamil Nadu.
  • Recipient: Equitas Small Finance Bank Limited.

Date / Timeline of Event:

  • Notice Reference Number: ZD330926162719U
  • SCN Attachment Date: September 19, 2026
  • Form GST DRC-01 Date: September 21, 2026
  • Time of Receipt: September 21, 2026 at 13:28 hours
  • Date of Disclosure to Exchanges: September 22, 2026

Brief Description of Outcome / Dispute:

The Bank has received a Show Cause Notice issued under Section 73 of the Central GST Act, 2017 and the Tamil Nadu GST Act, 2017 for the financial year 2022-23. The notice proposes a substantial demand against the Bank. The primary point of contention is the authority's proposal to disallow an exemption claimed on turnover, which substantially consists of interest income earned from loans and advances. The Bank's position is that such interest income is explicitly exempt from GST under Entry 27(a) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, except for interest involved in credit card services.

Impact of Outcome:

Financial Impact:

The SCN proposes an aggregate demand of Rs. 533,81,24,251/- (Rs. 533.81 Crores). This amount is broken down as follows:

  • Tax: Rs. 485,18,30,588/- (Rs. 485.18 Crores)
  • Interest: Rs. 11,10,604/- (Rs. 11.11 Lakhs)
  • Penalty: Rs. 48,51,83,059/- (Rs. 48.52 Crores)

Of the proposed tax demand, Rs. 479,33,04,094/- (Rs. 479.33 Crores) relates specifically to the proposed disallowance of exemption on turnover (interest income).

The document explicitly states that the SCN is at the show-cause stage and "does not constitute a final adjudication or crystallised liability." The financial impact is therefore contingent and cannot be presently determined; it will depend entirely on the final outcome of the proceedings.

Operational / Business / Strategic Impact:

The Bank must dedicate resources to prepare a detailed response to the SCN. The Bank is required to submit its response, together with relevant reconciliations and supporting records, within the prescribed timeline (which is not specified in the document). There is no mention of any operational disruption or strategic shift as a direct result of this notice.

Other Implications:

The Bank notes that it has consistently applied the statutory exemption treatment for this income and that assessments for prior years were completed without treating such exempt interest income as taxable. This suggests the Bank believes the authority's position represents a change in interpretation. The outcome of this case could have implications for the GST treatment of interest income across the banking sector.

Next Steps / Required Actions:

The Bank is examining all matters raised in the SCN. The next step is for the Bank to submit a detailed response to the authority, supported by reconciliations and records, within the prescribed timeline. The proceedings will then follow the adjudication process outlined in the GST laws.