PB Fintech’s subsidiary, Paisabazaar Marketing and Consulting Pvt. Ltd., has received a tax demand notice of ₹9.32 crore from the Income Tax Department in Delhi. The notice comes after the disallowance of ₹85.6 crore in expenses claimed under Section 37 of the Income Tax Act for the 2023-24 assessment year.
Disallowed Expenses and Tax Demand
The Assistant Commissioner of Income Tax rejected Paisa bazaar’s expense claims, citing insufficient substantiation despite the company providing documents during the assessment process. The department issued a demand notice under Section 156, raising ₹9.32 crore in tax liability. However, Paisabazaar clarified that this demand contradicts the assessment order, which calculated zero payable tax due to carried-forward losses offsetting the disallowed amount.
Company’s Response
Paisabazaar plans to appeal the assessment order and file a rectification application under Section 154 to address the inconsistency in the tax demand. The company stated its commitment to defending its case and adhering to prescribed timelines for responses.
Previous Regulatory Challenges
This isn’t Paisabazaar’s first encounter with tax authorities. In November 2024, it received notices under the Benami Transactions Act and Section 142(1) regarding payments to vendors and related parties. The broader investigation targeted intermediaries exceeding commission limits, with total tax evasion in the sector estimated at ₹30,000 crore.
Financial Practices Under Scrutiny
Concerns over PB Fintech’s financial practices have been raised previously, including allegations of improper revenue recognition between its subsidiaries Policybazaar and Paisabazaar. Such issues add to regulatory challenges for Paisabazaar, which lacks IRDAI registration—a critical compliance requirement for insurance intermediaries.
Sector-Wide Crackdown
The tax department’s scrutiny extends to multiple insurance companies and intermediaries accused of inflated commissions and regulatory violations. Paisabazaar’s case highlights increased oversight in India’s rapidly growing fintech sector.
Impact on PB Fintech
While immediate financial impact is mitigated by loss offsets, prolonged disputes could affect investor confidence and operational focus as PB Fintech expands its digital lending and insurance marketplaces. Resolving these regulatory challenges will be crucial for sustaining growth in a competitive sector.