Updated
Equitas Small Finance Bank has cut a proposed GST assessment by ₹510 crore after challenging the treatment of lending income. The remaining ₹23.95 crore is still disputed—but the scale of the problem for its shareholders has changed: it now equals 9.8% of the bank’s latest quarterly pretax profit, against more than twice that profit before the revision. Equitas update, quarterly results
The reduction comes alongside new disclosures from other banks that look similar in a news headline but reach into different parts of the business. RBL’s ₹173.09 crore proposal concerns input tax credits and equals 53.5% of its June-quarter pretax profit. ICICI’s ₹229.14 crore notice concerns services linked to minimum account balances; the tax alone equals 1.2% of that bank’s quarterly pretax profit.
The comparison changes the perspective for an owner of bank shares. A larger rupee demand can be a smaller claim against earnings, while an apparently smaller figure may omit interest and penalties. Nor does success in one dispute establish the outcome of another.
The earnings scale behind the notices
| Bank and disclosure | Disclosed amount, ₹ crore | Included in that amount | June-quarter pretax profit, ₹ crore | Amount / quarterly pretax profit |
|---|---|---|---|---|
| Equitas, September 28 | 23.95 | Tax, interest and penalty | 244.07 | 9.8% |
| RBL, September 30 | 173.09 | Tax, interest and penalty | 323.51 | 53.5% |
| ICICI, October 1 | 229.14 | Tax only; interest and penalty additional | 19,125.62 | 1.2% |
Kiwaro calculations from exact disclosed rupees and standalone results for April–June 2026. These are comparisons with historical earnings, not expected losses or estimates of the eventual accounting charge. ICICI’s figure does not establish the size of its full demand. RBL notice, RBL results, ICICI notice, ICICI results
Three different parts of the banking business
At Equitas, the original proposal was dominated by the treatment of loan interest. Of ₹485.18 crore in proposed tax, ₹479.33 crore—98.8%—concerned a proposed denial of exemption on turnover substantially comprising interest on loans and advances. Lending is central to the bank’s income: interest and discount on advances and bills supplied 79.2% of total income in the June quarter. That current business mix is distinct from the earlier tax period under dispute. Initial disclosure, results
Following a personal hearing, the authority reduced the aggregate proposal from ₹533.81 crore to ₹23.95 crore, Equitas said. Kiwaro’s reconciliation attributes ₹463.51 crore of the reduction to tax and ₹46.35 crore to penalty; interest was unchanged. The bank attributed the revision to its submissions on loan-interest income. Specified receipts and reconciliation items still require supporting-document checks. Revised computation
RBL’s dispute concerns the credit side of the GST calculation: input tax credit taken under a separate registration for its digital-banking business. It is a different issue from whether interest charged to borrowers is exempt. RBL says favourable orders on the identical issue for earlier years support its defence and that it does not presently expect a material adverse financial impact. That is management’s assessment of the notice. RBL disclosure
ICICI’s notices instead concern services provided to customers who maintain specified minimum balances. Its West Bengal disclosure on September 25 also illustrates how the components alter the headline: a ₹16.76 crore demand comprised ₹9.31 crore of tax, ₹6.52 crore of interest and ₹0.93 crore of penalty. The October disclosure gave tax alone. West Bengal notice, October notice
Earlier victories have not ended the disputes
RBL’s record stretches back at least a year. In October 2025 it disclosed a ₹92.00 crore notice concerning digital-banking input credits for 2019–20. Its latest filing reports favourable orders on the identical issue for 2018–19 and 2019–20, yet a fresh proposal now concerns 2022–23. The later statement provides evidence of favourable decisions on the issue; it does not identify the precise earlier notice sufficiently to establish a ₹92.00 crore realised saving. 2025 disclosure, 2026 disclosure
Minimum-balance services have also reached the courts. On June 1, the Karnataka High Court quashed service-tax show-cause notices in proceedings brought by Canara Bank and other banks. That is relevant history for the economic issue, but it concerned service-tax proceedings before that court; it does not dispose of ICICI’s subsequent GST notices. ICICI says it is already litigating similar issues, including through a writ petition. Court judgment, operative order on pages 158–159, ICICI disclosure
Relief is not automatically income
Equitas’s ₹509.86 crore reduction cannot be read as the same amount added to profit. Its first filing described a show-cause proposal, not a final adjudication or crystallised liability. Neither disclosure establishes a matching cash saving or a booked provision being reversed. Equitas filings
A separate income-tax disclosure from Yes Bank shows the difference when financial benefits are actually identified. On September 30 it reported an order determining a refund of about ₹363 crore, including interest and a tax benefit whose combined amount exceeded a materiality threshold of about ₹120 crore. The filing reports the refund order; it does not establish that all the cash had arrived. It is a different tax regime and outcome from Equitas’s reduced GST proposal. Yes Bank disclosure
Equitas is still seeking exemption for the remaining ₹23.95 crore and says it will submit further evidence. Its reprieve has sharply reduced the amount at issue. Across the other bank disclosures, the outstanding questions turn on different transactions, tax periods and proceedings—a distinction the headline rupee figures leave out. Equitas update
Updated 2 October 2026. This replaces the earlier article with a reconciliation, cross-bank earnings comparisons and historical reporting. Sources are company disclosures, exchange-filed standalone results and the cited court judgment. Figures are rounded; the calculations use exact disclosed amounts. The selected cases are not a census of bank tax disputes.
