IndiGo hit with ₹944 crore tax penalty, calls It "erroneous," plans legal challenge

IndiGo, India’s largest airline, is facing a ₹944.20 crore penalty from the Income Tax Department, a move it has termed "erroneous" and vowed to contest legally.

The airline's parent company, InterGlobe Aviation, received the tax order on Saturday, which pertains to the assessment year 2021-22. In a regulatory filing on Sunday, IndiGo clarified that the penalty was based on a misinterpretation of its appeal status before the Commissioner of Income Tax (Appeals) (CIT(A)).

“The order has been issued under the assumption that our appeal against the assessment order under Section 143(3) has been dismissed, while in reality, it is still pending adjudication,” the company stated.

IndiGo has assured stakeholders that it will take legal steps to challenge the penalty. Despite the substantial fine, the airline insists that it will not significantly impact its financial health, operations, or business activities.

“The order does not have any major effect on our financials, operations, or overall business,” IndiGo added.

The tax penalty comes at a challenging time for the airline, which recently reported an 18.6% drop in consolidated net profit for Q3 of FY25, down to ₹2,448.8 crore from ₹2,998.1 crore in the same period last year. Rising operational costs, which surged by 20% to ₹20,466 crore, have further pressured profitability.

Despite these hurdles, IndiGo remains the market leader in Indian aviation. According to the Directorate General of Civil Aviation (DGCA), domestic air passenger traffic grew by 6.12% in 2024, reaching 16.13 crore passengers. IndiGo continues to dominate the sector with a 64.4% market share, significantly ahead of Air India’s 26.4%.