Mahindra & Mahindra Faces Rs 4.12 Crore Penalty Over Tax Credit Issues in Two-Wheeler Business

Mahindra & Mahindra disclosed on Friday that it has been slapped with a penalty of Rs 4.12 crore related to input tax credit claims and education cess credit balance transition from the pre-GST regime to the GST regime concerning its two-wheeler business.

According to the regulatory filing, the penalty was imposed by the office of the Deputy Commissioner, State Tax, Audit Wing, Indore-01, Madhya Pradesh, and amounts to Rs 4,11,50,120 for Mahindra Two Wheelers Ltd (MTWL), which was previously demerged from MTWL and later merged with Mahindra & Mahindra.

The penalty is attributed to reasons such as invoices for which Input Tax Credit (ITC) was claimed by MTWL not being reported by vendors in GST returns, resulting in their exclusion from auto-populated GSTR-2A. Another factor is the disallowance of the carry forward of Education Cess credit balance from the pre-GST regime to the GST regime.

Despite the penalty, Mahindra & Mahindra plans to file an appeal, expressing optimism about a favorable outcome at the appellate level. The company does not anticipate a significant financial impact from the order.