IndiGo slapped with ₹944 crore tax penalty, vows legal battle against 'erroneous' order

IndiGo, India’s largest airline, has pushed back against a hefty ₹944.20 crore penalty imposed by the Income Tax Department, calling the order legally flawed and vowing to contest it.

The penalty, linked to the assessment year 2021-22, was issued to InterGlobe Aviation, IndiGo’s parent company, on Saturday. In a regulatory filing, IndiGo asserted that the order was based on an incorrect assumption that its appeal before the Commissioner of Income Tax (Appeals) had been dismissed, whereas it remains active and under review.

“The Company strongly believes that the order passed by the Income Tax Authority is not in accordance with the law and is erroneous,” an IndiGo spokesperson stated, adding that the airline would pursue all available legal remedies to challenge the ruling.

Despite the magnitude of the fine, IndiGo has assured that its financial position and day-to-day operations will remain unaffected. “This order does not have any significant impact on the company’s financials, operations, or overall business activities,” the airline said in its statement.

Financial Pressures Mount

The tax penalty comes at a time when IndiGo is already grappling with economic headwinds. The airline recently reported an 18.6% decline in its consolidated net profit for the third quarter of FY25, with earnings sliding to ₹2,448.8 crore from ₹2,998.1 crore in the previous year. Rising operational costs, which surged by 20% to ₹20,466 crore, have further strained profitability.

Market Dominance Despite Setbacks

Despite the financial pressures, IndiGo continues to dominate India’s 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. IndiGo retains its commanding lead in market share, holding 64.4%, far ahead of its closest competitor, Air India, which holds 26.4%.