ICICI Bank Faces ₹237.9 Crore GST Demand, ₹21.6 Crore Penalty: Supreme Tax Battle Ahead
Mumbai tax authorities allege underpayment of GST on services linked to minimum balance accounts
ICICI Bank plans to challenge order, citing ongoing litigation on similar issues
By Our Legal Reporter
New Delhi: December 21, 2025:
India’s second-largest private sector lender, ICICI Bank, has received a GST demand order of ₹237.9 crore along with a penalty of ₹21.6 crore, raising serious questions about compliance in the banking sector. The order was issued on December 17, 2025, by the Additional Commissioner of CGST and Central Excise, Mumbai East Commissionerate, under Section 73 of the Maharashtra GST Act, 2017.
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The demand relates to services provided by the bank to customers who maintain specified minimum balances in their accounts. Authorities allege that ICICI Bank failed to pay GST on these services, leading to the hefty tax claim.
Breakdown of the Demand
- Total Demand: ₹237.9 crore
- Tax Component: ₹216.27 crore
- Penalty: ₹21.62 crore
- Interest: Applicable as per GST provisions
The order is one of the largest tax demands faced by a private bank in recent years, highlighting the increased scrutiny of financial services under GST law.
Why the Demand Was Raised
Authorities argue that ICICI Bank provided taxable services to customers maintaining minimum balances but did not pay GST on them. These services allegedly fall under the definition of “supply” under GST law.
The issue stems from the interpretation of whether charges linked to minimum balance accounts constitute taxable services. ICICI Bank has maintained that such services are part of core banking operations and should not attract GST.
ICICI Bank’s Response
ICICI Bank has stated that it is already engaged in litigation and writ petitions on similar issues raised in past orders and show cause notices. The bank plans to challenge the latest order through appropriate legal channels.
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In its regulatory filing, ICICI Bank clarified that it would contest the demand, emphasizing that the matter involves interpretation of GST law rather than deliberate tax evasion.
Legal and Financial Implications
- For ICICI Bank: The demand adds financial pressure and reputational risk. However, since the bank plans to contest, the final liability may be reduced or overturned.
- For the Banking Sector: The case sets a precedent for how GST applies to minimum balance services, potentially affecting other banks.
- For Regulators: The order reflects the government’s intent to tighten compliance and expand the tax net in financial services.
Expert Reactions
Tax experts have described the case as a test of GST’s scope in financial services. Some argue that banks should pay GST on all customer-facing services, while others believe core banking functions should remain exempt.
Industry analysts note that the ruling could have far-reaching consequences for the banking sector, especially if similar demands are raised against other lenders.
Broader Context
This is not the first time ICICI Bank has faced tax scrutiny. Similar disputes have arisen in the past, with banks contesting GST applicability on various services.
The case highlights the complexity of GST compliance in financial services, where distinctions between taxable and exempt services are often blurred.
Conclusion
The ₹237.9 crore GST demand and ₹21.6 crore penalty against ICICI Bank marks a significant development in India’s financial sector. While the bank plans to contest the order, the case underscores the need for clarity in GST law regarding banking services.
As litigation unfolds, the outcome will not only affect ICICI Bank but also shape the future of tax compliance in India’s banking industry.
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