The edtech unicorn PhysicsWallah took a sigh of relief after the Income Tax Department slashed its tax demand from Rs 263.34 crore to Rs 192.76 crore following a revised petition submitted by the firm.
Following this petition, the tax authorities issued an updated order on April 13, 2026, which reduced the total demand to Rs 192.76 crore. Even with this decrease, a considerable portion of the tax obligation remains contested.
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The firm revealed in a stock exchange announcement that it had first received a tax demand notification under Section 143(3) of the Income Tax Act for the fiscal year 2023-24. Subsequently, it filed a rectification petition under Section 154, requesting a revision of the demand.
To dispute the revised order, PhysicsWallah has lodged an appeal with the Joint Commissioner (Appeals)/Commissioner of Income Tax (Appeals). The firm indicated that it is confident it has robust legal and factual bases to challenge the remaining demand.
Exact reason for tax demand
The contention originates from an evaluation order and request notification dated March 16, 2026, under which the revenue authority had imposed a claim of Rs 263.34 crore, according to The Economic Times.
As per the company's prior announcement, the evaluation unit had classified specific investments acquired during FY24, including contributions from SEBI-recognised Category II alternative investment funds, as taxable revenue, as per the ET report.
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The announcement further clarified that the ongoing tax proceedings are not anticipated to substantially affect the firm's financial status, operations, or business endeavours.
While the firm has not specified the precise nature of the dispute, such instances in the startup ecosystem frequently emerge from disagreements over the classification of certain transactions, particularly concerning whether they should be regarded as capital or taxable revenue.
PhysicsWallah Shares Shot up to Rs 108.70 per piece in the opening hour and were trading at Rs 105.75 apiece with 4.93% surge at bourses.
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