The Income Tax Department has imposed a INR 944.20 crore penalty on IndiGo, India’s largest airline. However, the airline has termed the order “erroneous” and plans to challenge it legally. The penalty pertains to the assessment year 2021-22, and the airline’s parent company, InterGlobe Aviation, received the notice on Saturday.
In a regulatory filing on Sunday, IndiGo stated that the penalty is based on a misinterpretation of its appeal before the Commissioner of Income Tax (Appeals) (CIT(A)). The airline clarified that its appeal is still under adjudication and has not been dismissed, contrary to what the order suggests. IndiGo strongly believes that the penalty is “erroneous and frivolous” and intends to pursue legal remedies to contest it.
Despite the hefty penalty, IndiGo assured that the order will not significantly impact its financials, operations, or overall business activities. The airline remains financially stable and continues its growth trajectory in the Indian aviation sector. According to data from the Directorate General of Civil Aviation (DGCA), domestic air passenger traffic grew by 6.12% in 2024, reaching 16.13 crore passengers, with IndiGo holding the largest market share at 64.4%.
The penalty comes at a challenging time for IndiGo, as the airline recently reported an 18.6% decline in its consolidated net profit for the third quarter of FY25. Earnings fell to INR 2,448.8 crore from INR 2,998.1 crore a year ago, primarily due to rising operational costs, which surged by 20% to INR 20,466 crore. The airline is focusing on cost management and strategic expansion to maintain its market leadership.
IndiGo continues to dominate the Indian aviation industry, far ahead of competitors like Air India, which holds a 26.4% market share. While the tax penalty poses a legal challenge, IndiGo remains confident in its position and is prepared to defend itself through the appropriate legal channels.