Tata Steel Challenges ₹25,185 Crore Tax Reassessment Over Debt Waiver

5 Apr 2025 , 11:55 PM

Tata Steel has taken legal steps against the Income Tax Department’s recent move to reassess its taxable income for FY 2018–19 (AY 2019–20). The tax row is connected to a ₹25,185.51 crore waiver of debt that was part of Tata Steel’s purchase of Bhushan Steel, which is now named Tata Steel BSL Limited. The purchase was made via Tata Steel’s subsidiary, Bamnipal Steel Limited, under the Insolvency and Bankruptcy Code (IBC).

First, Bhushan Steel’s tax return for the year was accepted without any issues by the Assessing Officer in June 2020. But five years later, on March 13, 2025, Tata Steel received a show-cause notice from the Income Tax Department requesting additional documentation pertaining to the waiver of debt.

Subsequent to this notice, an order of reassessment was issued on March 31, 2025, which included the full ₹25,185.51 crore waived debt value in Tata Steel’s taxable income for the year.

Tata Steel has vehemently objected to the reassessment on the grounds that the waiver cannot be considered taxable income under the Income Tax Act, 1961 particularly as it resulted from a resolution under the IBC process.

The firm has lodged a writ petition with the Bombay High Court on March 24, 2025, bringing to light technical errors in the reassessment and basing their argument on judicial precedents of the past.