GST officials took the view that the startup’s services such as appliance repair and painting also came under Section 9(5) of the CGST Act, and would have to be taxed accordingly
Urban Company, which plans to appeal the order, also claimed that the demand notice would have no impact on the financial or operational activities of the company.
Besides this, the company is also facing at least three other demand notices totalling INR 51.3 Cr from GST departments of Haryana, Maharashtra and Tamil Nadu
Hyperlocal services unicorn Urban Company has received a tax demand and penalty notice totalling INR 56.4 Cr from Maharashtra goods and service tax (GST) authorities.
In a filing with the exchanges, the company said that total amount includes a principal tax of INR 51.3 Cr and a penalty of INR 5.13 Cr.
The office of the joint commissioner of central GST and central excise, Thane, confirmed the notice for the period between April 2021 and March 2025. The case pertains to alleged non-payment of GST by the company on payouts made to service professionals.
Urban Company claims that it has been levying GST at 5% on payments made to professionals only providing services such as plumbing, carpentry and cleaning. In effect, the listed unicorn treated these offerings as housekeeping services.
However, Thane GST authorities took the view that services such as appliance repair and painting also came under Section 9(5) of the CGST Act 2017. As such, payouts for these services would also have to be taxed accordingly.
Accordingly, the tax department directed Urban Company to cough up the tax on all such services during the period under review.
Notably, Section 9(5) of the Act applies to ecommerce operators, making them liable to pay GST for certain notified services like housekeeping services, passenger transport services and others.
The consumer services giant now plans to appeal the order before an “appropriate” authority.
“The Company will be filing an appeal against the order before the appropriate authority. We believe that we have a strong case on merits, supported by the opinion of our external legal and tax advisors,” read the filing.
Meanwhile, Urban Company also claimed that the tax demand notice would have no impact on the financial, operational or any other activities of the company.
This is not the listed startup’s first brush with GST authorities. The company is already facing at least three other demand notices totalling INR 51.3 Cr from GST departments of Haryana, Maharashtra and Tamil Nadu.
Haryana GST officials have issued a demand order worth INR 20.4 against the company for non-payment of taxes linked to an expanded definition of housekeeping services, and mismatches in GSTR-2A and actual input tax credit availed for the year 2018-19.
Meanwhile, Maharashtra tax authorities have also slapped a demand notice of INR 14.6 Cr on the startup for non-payment of GST for commission income earned in Maharashtra but deposited in Haryana. Similarly, Tamil Nadu GST officials have issued a demand order of INR 15.97 Cr as the assessing officer considered the full value of services supplied.
All of these tax notices have been disputed by the listed company.
Founded in 2014, Urban Company initially operated as a full-stack online marketplace connecting service professionals with consumers. In 2023, the company also forayed into the consumer electronics segment by launching its ‘Native’ line of products such as water purifiers and smart doors.
Earlier this year, it also launched ‘Insta Help’ to offer a 15-minute maid booking service.
On the financial front, Urban Company reported a net loss to INR 59.3 Cr in Q2 FY26, up 32X from INR 1.8 Cr in Q2 FY25. Meanwhile, operating revenue zoomed 37% YoY and 4% QoQ to INR 380 Cr during the quarter under review.
Shares of Urban Company closed Friday’s trading session 3.14% lower at INR 126.6 on the BSE.