Vodafone Idea Faces ₹21.39 Crore GST Demand for Alleged Short Payment Under RCM

Vodafone Idea Limited (VIL) has received a goods and services tax (GST) demand order of RS. 21.39 crore from the Joint Commissioner of Central Goods and Services Tax (CGST) and Central Excise, Bihar.

The order alleges that the company made a short payment of tax under the reverse charge mechanism which applies to services received by the company from unregistered suppliers or from abroad. The demand has been issued under Section 74 of the CGST Act, 2017, which deals with cases involving fraud or suppression of facts.

The order includes not just the tax amount but also interest and penalty. The total demand was communicated to the company on 5 August 2025. In its disclosure, Vodafone Idea stated that it does not agree with the contents of the order.

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The company said it plans to challenge the order and will file an appeal before the appropriate authority. The company has also clarified that the impact on the financial statements will be limited to the tax, interest, and penalty mentioned in the order but since the company does not accept the findings, it will take the necessary legal steps.

The reverse charge mechanism (RCM) under GST shifts the responsibility of tax payment from the supplier to the recipient. It usually applies in limited cases, such as import of services or transactions with unregistered suppliers. In this case, the tax authorities allege that Vodafone Idea failed to discharge GST correctly under this mechanism.

This is not the first time telecom operators have faced scrutiny under GST. Because of the high volume of transactions and complex invoicing structures in the telecom sector, tax compliance often becomes a matter of detailed interpretation and legal review.

Vodafone Idea, which has been facing financial stress for several years, is likely to challenge the demand in full. The outcome of the appeal will determine whether the company will have to pay the full amount or receive relief from the tax authorities.

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