Food delivery giant Swiggy has come under the scrutiny of Indian tax authorities, receiving a tax assessment order demanding over Rs. 158 crore in additional taxes for the financial year 2021–22. The order, issued by the Deputy Commissioner of Income Tax, Bangalore, relates to alleged disallowances under Section 37 of the Income-tax Act, 1961, and interest income on refunds not being reported as taxable. While the company asserts that it has a robust legal position and plans to appeal the decision, the development underscores the tightening regulatory environment faced by India’s digital platforms.

Tax Assessment Targets Cancellation Charges and Interest Income

According to Swiggy’s regulatory filing, the tax authority’s order pertains to two main issues. First, it disputes the cancellation charges paid to merchants, which have been disallowed under Section 37 of the Income-tax Act—a section governing deductions for business-related expenditures. Second, it involves the non-disclosure of interest earned on income tax refunds as taxable income.

These two line items have collectively resulted in an additional tax liability of Rs. 158.25 crore for the assessment year spanning April 2021 to March 2022.

Company Maintains Confidence in Legal Position

Despite the large figure, Swiggy has downplayed the immediate impact, stating that the tax order will not materially affect its financials or operations. The company emphasized that it has strong grounds for appeal, and is actively reviewing the assessment through appropriate legal avenues.

“We are confident in our tax positions,” the company said, adding that it is taking all necessary steps to safeguard its interests through review or appeal mechanisms available under Indian tax laws.

This suggests the company may approach the Commissioner of Income Tax (Appeals) or even higher judicial forums if needed.

Regulatory Heat Intensifies on Digital Economy Players

The notice to Swiggy is part of a broader push by Indian tax authorities to bring more transparency and accountability to the digital economy. Startups and tech platforms, particularly those operating at scale in food delivery, e-commerce, and fintech, are being increasingly scrutinized for tax compliance and disclosure practices.

This is not the first instance of tax action involving a new-age company. Regulatory focus has sharpened around classification of revenue, indirect tax liabilities such as GST on platform commissions, and other operational intricacies that are often treated differently from traditional businesses.

Financial Cushion Likely to Absorb Impact

For Swiggy, which has raised billions in funding over recent years and maintains a substantial cash runway, the Rs. 158 crore demand may not be financially debilitating. However, the reputational implications and potential for extended legal entanglements could pose distractions at a time when the company is focusing on expansion, IPO readiness, and enhancing operational profitability.

Swiggy is currently competing neck-and-neck with rival Zomato in India’s on-demand food delivery market, and regulatory clarity will be critical to investor confidence as it inches toward a potential listing.

What This Means for Investors and Industry Peers

While Swiggy has taken the position that this tax demand is defendable, the case is a cautionary signal for other tech startups and digital-first enterprises. From structuring of platform incentives to treatment of refunds and interest income, the tax framework in India is evolving—and not always aligned with business interpretations adopted by high-growth startups.

For investors, this underlines the need for robust compliance practices and proactive risk assessments in portfolio companies. And for industry players, it emphasizes the importance of engaging tax experts to navigate ambiguous or evolving regulatory landscapes.