Taxman Recalculates, TMB Rejoices: Rectification Order Brings Major Relief

Nikunj Parikh May 14, 2026 260 Views

Tamilnad Mercantile Bank (TMB) has received a rectification order from the Income Tax Department, sharply reducing a prior tax demand for AY 2013–14 from about ₹204.23 crore to ₹2.93 crore. The bank has clarified that the revised demand is not expected to have any material impact on its financial statements or operations.

The Thoothukudi-headquartered private sector bank, Tamilnad Mercantile Bank notified the BSE and NSE on 14 May 2026 under SEBI’s material event disclosure norms. The rectification follows TMB’s earlier intimation dated 18 March 2026, when the original demand notice under Section 156 of the Income Tax Act, 1961, was first communicated to the exchanges.

Regulatory Background And Rectification Order

The revised tax demand arises from a rectification order issued by the Deputy Commissioner of Income Tax, Circle 1, Tirunelveli, for Assessment Year 2013–14. The order, dated 14 May 2026, relates to disallowance of the bank’s claim under Section 36(1)(viia) of the Income Tax Act, which deals with provisions for bad and doubtful debts created by banks. The rectification reduces the demand to ₹2,93,39,404 from the earlier ₹2,04,23,11,454, providing substantial clarity and relief on a long‑pending legacy assessment.

Disclosure And Impact On TMB

TMB has furnished detailed disclosures as per Regulation 30 and Schedule III, Para A(20) of SEBI’s Listing Regulations, along with the latest SEBI circular on disclosure formats. In its assessment, the bank has stated that the rectified demand will not materially affect its financial position, capital adequacy or ongoing operations, and that all regulatory and legal requirements in relation to the order are being duly complied with.

Key Highlights

Rectification order received from Deputy Commissioner of Income Tax, Circle 1, Tirunelveli
Original tax demand for AY 2013–14: approximately ₹204.23 crore
Revised tax demand post‑rectification: approximately ₹2.93 crore
Issue linked to disallowance under Section 36(1)(viia) of the Income Tax Act
Order dated 14 May 2026; communication made to BSE and NSE the same day
Bank states revised demand is not materially impactful on financial statements
Disclosure made under Regulation 30 and Schedule III, Para A(20) of SEBI LODR
Reference to earlier exchange intimation dated 18 March 2026 on original demand