₹2,209 crore tax twist hits Yes Bank, lender questions basis of notice

Yes Bank is staring at a tax demand of ₹2,209 crore for the assessment year 2019–20, even though the reassessment grounds have been dropped. The income-tax department, which reopened the case in April 2023, issued the demand notice on March 28, prompting a sharp response from the bank, which called the move "without any basis."

The reassessment was conducted by the National Faceless Assessment Unit. As per Yes Bank’s regulatory filing, “The grounds on which the reassessment proceedings were initiated have been dropped,” with no new disallowances or additions made. The original income assessed under section 144 of the Income Tax Act remained unchanged, leading the bank to assert, “Consequently, no demand should have been raised.”

Despite this, a demand notice under section 156 was issued, totaling ₹2,209.17 crore, including ₹243.02 crore in interest. Yes Bank said the demand “prima facie appears to be without any basis” and maintained that it has sufficient grounds to defend its position. It added that the order is unlikely to materially impact its financial or operational health.

The bank plans to challenge the order through appeal and rectification proceedings under applicable laws.

The development comes as Yes Bank’s stock continues to face pressure. On Friday, March 28, the share closed at ₹16.88 on the BSE—down from the previous close of ₹17.26—after hitting an intraday high of ₹17.50 and low of ₹16.83.

Analysts point to continued technical weakness, with the stock trading below key moving averages and bearish EMA crossovers adding to selling pressure. Over the past year, the stock has declined 27.24%, underperforming both the banking sector and benchmark indices like the Sensex, which dipped only 1.27%.

Despite reporting a 108% year-on-year jump in net profit for Q3 FY24-25 and improved asset quality, the stock's performance has remained tepid.