Maruti Suzuki India Faces Rs 850 Crore Deferred Tax Liability Increase

Maruti Suzuki India announced a substantial increase in provision for deferred tax liability amounting to Rs 850 crore. This adjustment follows the withdrawal of indexation benefits for long-term capital gains on debt mutual funds, as mandated by the Finance (No.2) Act 2024. The impact will be felt in Q2 of FY 2024-25.

Maruti Suzuki India on Saturday revealed it will need to bolster its provision for deferred tax liability by approximately Rs 850 crore. The increase comes in response to the Finance (No.2) Act 2024, which withdrew indexation benefits while calculating long-term capital gains on debt mutual funds purchased before April 1, 2023.

The automaker has been making accounting provisions for these liabilities on fair value gains from its investments. As a consequence, the one-time impact on profit after tax will be evident in the second quarter of the current fiscal year, the company asserted in a regulatory filing.

According to Maruti Suzuki India’s Chief Investors Relations Officer Rahul Bharti, this accounting provision adjustment arises solely from the revised tax rules and will impact the tax on other income in future dates, not affecting the company’s operational profit.