Bajaj Auto Faces ₹3.87 Crore GST Penalty Over Input Tax Credit Dispute

Bajaj Auto Limited informed stock exchanges on October 7, 2025, about receiving a tax demand order of Rs 3.87 crore from GST authorities in Guwahati, related to alleged excess input tax credit claimed during the financial year 2021-22.

The Joint Commissioner of Central GST and Excise in Guwahati issued the order under section 73(9) of the CGST Act 2017 and Assam GST Act 2017. The company received the order on October 6, 2025, at 7:00 PM, which demands ₹ 3,51,87,014 as differential tax along with applicable interest and penalty of ₹35,18,701.

The tax authorities alleged that Bajaj Auto availed excess input tax credit in its GSTR-3B returns compared to what was available in GSTR-2A for the financial year 2021-22. Input tax credit allows businesses to claim credit for GST paid on purchases against GST liability on sales.

Bajaj Auto maintained that it availed input tax credit after fulfilling all conditions as per GST law provisions. The company stated it will file an appeal against the order based on the merits of the case and emphasized that the order does not have major financial implications on the company.

This represents the latest in a series of GST-related disputes for Bajaj Auto. Earlier in 2025, the company faced similar challenges, including a Rs 138 crore penalty in March 2025 related to HSN classification disputes and a Rs 10 crore penalty in January 2025 for instrument cluster classification issues. 

Bajaj Auto shares traded at Rs 8,792 on October 7, 2025, showing resilience despite the penalty announcement. The stock has demonstrated stability in recent trading sessions, with a one-week gain of 0.85% and three-month returns of 4.26%. 

The company's market capitalization stands at Rs 2,45,523 crore, maintaining its position as one of India's largest two-wheeler manufacturers. Trading volumes remained normal at around 300,715 shares, indicating that investors viewed the penalty as manageable given the company's strong financial position. 

The GST penalty comes amid a positive phase for Bajaj Auto, which has benefited significantly from recent GST rate cuts on two-wheelers. The company reported strong festive season demand following the government's decision to reduce GST rates from 28% to 18% on motorcycles under 350cc. 

Bajaj Auto passed on the full GST reduction benefit to customers, offering price cuts of up to ₹20,000 on two-wheelers and ₹24,000 on three-wheelers effective September 22, 2025. This move has led to increased customer footfalls and improved retail sentiment during the festive season. 

With a PE ratio of 32.33 and earnings per share of ₹271.91, Bajaj Auto maintains strong fundamentals. The company's export business continues to perform well, with record quarterly sales in Latin America and growth at 1.5 times the industry rate in key international markets. 

The ₹3.87 crore penalty represents a small fraction of the company's financial capacity. Bajaj Auto's consistent track record of challenging such orders through legal channels and its strong balance sheet position suggest minimal long-term impact on business operations or investor confidence.

The company's focus remains on capitalizing on festive demand and the positive momentum from GST rate cuts, with management expecting October sales to surpass September performance driven by improved consumer sentiment and affordability.