Meesho, the famous e-commerce platform for cheap and affordable goods, seems to be in big trouble these days. The Income Tax Department has served a huge tax notice of Rs 1500 crore to the company. It is alleged that Meesho has understated his actual income. This news is also important for the millions of customers who search for cheap deals on this app every day, because the huge financial pressure on any e-commerce company can ultimately have a direct impact on its business strategies and the offers available to customers.
What is the whole matter?
This tax demand notice has been sent by the Income Tax Department for the financial year 2022-23. Meesho itself has confirmed this big notice in its filing given to the stock exchange. The department says that there are some flaws in the income figures declared by the company. In view of this, the tax authorities have made ‘additional adjustments’, in which along with the outstanding tax, huge interest amount has also been added. However, the management of Meesho has assured the investors that they are closely reviewing this order and at present this notice will not have any major negative impact on their financial functioning.
Companies get trapped in the ‘game’ of discounts
Common customers are often happy thinking that they are getting bumper discounts on online shopping. But this huge discount sometimes becomes a legal hurdle for the companies. In fact, the main reason for dispute between e-commerce companies and the tax department is the incentives and discounts given to customers. The discounts that companies give to woo customers, they show as ‘Business Expense’ in their balance sheet, so that their taxable profits can be reduced. At the same time, in many cases the Income Tax Department does not consider these expenses completely eligible for deduction. It is in this tussle that such big tax demand notices are born.
Old habit or legal entanglement?
Facing such tax notices is not a new thing for Meesho. The company has informed that it has received a similar notice for the financial year 2022 also. According to the company’s IPO documents, on January 25, 2025, the Income Tax Department had issued a show cause notice seeking answers on the proposed changes in tax returns. Then the matter was related to deduction of advertising expenses, TDS on forward contract profits and foreign payments.
At that time, Meesho had given additional information while presenting his side on 7th February. But on March 13, the department passed an order for tax demand of about Rs 572 crore. Not accepting defeat, the company approached the Karnataka High Court on 9 April. The court had put an interim stay on this tax demand on April 17, and the matter is still pending in the court.
What is Meesho’s financial situation?
On the latest Rs 1500 crore notice, Meesho has made it clear that it does not at all agree with the findings of the Income Tax Department. The company is taking all necessary legal steps to protect its interests. But, if we look at the current financial condition of the company, the situation is not of much relief. Meesho’s net loss has increased 13 times to Rs 491 crore in the October to December quarter. However, a positive aspect is that during this period the operating revenue of the company increased by 31 percent to Rs 3,517 crore. Investors also keep an eye on the company’s performance in the stock market; On Friday, Meesho shares closed at Rs 159.10 on Bombay Stock Exchange (BSE) with a marginal gain of 0.44%.