Ahead of its ₹2,600 crore IPO, Pine Labs faces a ₹300 crore tax demand, disclosed in its DRHP. The fintech unicorn’s regulatory hurdles include pending GST notices and show-cause orders, adding complexity to its public listing journey.
What Is the Tax Demand?
Pine Labs received a tax demand for ₹214.11 crore from the Directorate General of GST Intelligence (DGGI), Mumbai, due to disallowed input tax credits on services like co‑branding, e-commerce listings, and gift-card advertising from July 2017 to March 2024. The Joint Commissioner in Bengaluru upheld the demand in February 2025
Including interest liability of ₹95.57 crore, the company’s total GST exposure now stands at ₹309.68 crore—far exceeding its nine-month FY25 net profit of ₹26 crore
Other Tax & Audit Issues
Pine Labs also faces a ₹19.26 crore GST notice from a FY20 audit. Although many items are disputed, the company has appealed and paid ₹1.9 crore under protest
An older ₹13.87 crore service tax demand from 2012–17, largely resolved following a GST Council clarification in December 2024, still leaves a small ₹0.49 crore contingent liability moneycontrol.com.
Regulatory Scrutiny Beyond Taxes
Additionally, Pine Labs disclosed an Enforcement Directorate (ED) inquiry from April 2023 regarding prepaid card operations and KYC compliance. No formal action has been initiated to date
The company’s DRHP also highlights concerns in audit reports over internal controls, delayed statutory filings, and financial reporting compliance
Company’s Stand
Pine Labs is strongly contesting the ₹300+ crore demands, asserting that it has a well-founded legal case and has already filed appeals. It remains optimistic about winning at higher levels
Why It Matters
- The ₹309.68 crore claim vastly outweighs the fintech’s nine-month FY25 profits (~₹26 crore), potentially impacting free cash flow and valuation outlook.
- Regulatory uncertainties could weigh on investor sentiment during the IPO roadshow.
- The DRHP disclosure enhances transparency, equipping investors to better assess financial and operational risks.
Conclusion
Pine Labs faces a ₹300+ crore tax notice, primarily from a ₹214 crore GST demand plus interest, as well as other pending disputes—all at a crucial pre-IPO phase. While the company is appealing and confident in its case, these liabilities add a regulatory overhang ahead of its ₹2,600 crore listing.
