SBI Cards Gets ₹81.93 Cr GST Show Cause Notice Over Input Tax Credit Claims
In a significant regulatory development, SBI Cards and Payment Services Ltd has received a show cause notice from the Additional Commissioner (East 1), CGST Gurugram, proposing to disallow Input Tax Credit (ITC) amounting to ₹81.93 crore. The notice, dated June 30, 2025, was shared with stock exchanges on July 1, 2025, and has already stirred discussions in the financial market.
Why Did SBI Cards Receive This GST Notice?
The notice relates to the assessment period from FY 2018-19 to 2020-21. According to the GST authorities, the disallowance comprises:
- ₹81.45 crore due to mismatches between GSTR-2A and GSTR-3B filings.
- ₹47.53 lakh linked to transactions involving vendors whose GST registrations were either retrospectively cancelled or who failed to file GSTR-3B returns.
This proposed tax demand is being evaluated under Section 74(1) of the Central Goods and Services Tax (CGST) Act, 2017, along with relevant provisions of the SGST and IGST Acts. The notice also states that interest under Section 50 and a penalty equal to the ITC amount may be levied if the company fails to justify its claims.
Breakdown of the ₹81.93 Crore Input Tax Credit Under Dispute
- ₹63.55 crore under IGST
- ₹8.89 crore under CGST
- ₹8.99 crore under SGST
SBI Cards has been given 30 days to respond and explain why this ITC should not be recovered along with applicable interest and penalties.
SBI Cards’ Response
The company has responded calmly and maintained its stance. In an official filing, SBI Cards said it has availed credit in line with GST laws and has full confidence that the notice will be resolved favorably. The management stated, “The company believes it has a strong case on merits and expects the demand to be dropped.”
Impact on SBI Cards Share Price
Following the news of the GST notice, SBI Cards’ share price declined by ₹18.55, or 1.95%, closing at ₹932.35 on the Bombay Stock Exchange (BSE) on July 1. The market sentiment reflects a cautious outlook among investors, even though the company has asserted compliance with the law.
Investor Takeaway
While regulatory notices can lead to short-term volatility, it’s important to note that such disputes are not uncommon in the corporate world, especially in sectors dealing with large-scale vendor transactions and input credit mechanisms. SBI Cards remains one of India’s leading pure-play credit card issuers and enjoys strong backing from its parent State Bank of India.
Analysts suggest that the ₹81.93 crore tax dispute, though significant in amount, does not represent a threat to the company's long-term fundamentals unless penalties escalate or further legal proceedings unfold. However, short-term traders may continue to react to the headlines until clarity emerges in the next 30 days.
What Is Input Tax Credit (ITC) and Why Is It Important?
Input Tax Credit (ITC) is a mechanism under GST that allows businesses to claim credit for taxes paid on purchases used in the course of their business. For a company like SBI Cards, this credit is critical for maintaining cash flows and reducing tax liabilities.
However, strict compliance is necessary — credits can only be claimed if vendors are registered, compliant, and file proper returns. Mismatches in GSTR-2A (auto-generated purchase returns) and GSTR-3B (summary returns filed by the company) often trigger disputes like this one.
Conclusion: What’s Next for SBI Cards and Its Investors?
With a response deadline set at 30 days, the coming weeks will be crucial. If the company successfully defends its position, investor confidence could bounce back quickly. On the other hand, any unfavorable ruling or extended litigation could weigh on sentiment.
Investors are advised to stay updated through official filings and wait for further clarity before making buy or sell decisions based on this notice. For now, this appears to be a regulatory hurdle that the company is prepared to tackle.
Disclaimer: This article is for informational purposes only and not financial advice. Please consult a qualified professional before making investment decisions.
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