Indian Overseas Bank Receives Rs.502 Crore Income Tax Demand Notice

Hellobanker Team

March 12, 2026

State-owned Indian Overseas Bank (IOB) has received an income tax demand notice of more than ₹502 crore from the Income Tax Department. The notice has been issued under Section 156 of the Income Tax Act, 1961 and relates to the assessment year 2017–18.

Explained: Section 156 of the Income Tax Act, 1961

Section 156 of the Income Tax Act, 1961 deals with a Notice of Demand issued by the Income Tax Department. This notice is sent to a taxpayer when the department believes that a certain amount of tax, interest, penalty, or other dues must be paid.

If the tax authority determines that a taxpayer owes money after assessment or reassessment, it issues a formal demand notice under Section 156 specifying the amount that needs to be paid.

Key Points about Section 156:

The Income Tax Department sends a written demand notice to the taxpayer.
The notice clearly mentions the amount of tax, interest, or penalty payable.
The taxpayer usually gets 30 days to pay the demanded amount.
If the taxpayer disagrees, they can challenge the order through legal remedies.

What a Taxpayer Can Do:

Pay the demanded tax within the specified time.
File an appeal if the demand is incorrect.
Seek rectification or clarification from tax authorities.

Large companies and banks sometimes receive such notices during tax assessments. In many cases, the concerned organisation challenges the demand if it believes the tax calculation is incorrect.

In simple words: Section 156 allows the Income Tax Department to send a demand notice asking a taxpayer to pay any outstanding tax dues.

Reason for the Tax Demand

The demand notice amounts to ₹502,29,08,834 (about ₹502.29 crore). The Income Tax Department issued the notice after allegedly re-computing the bank’s income and making certain disallowances in the income tax returns filed by the bank for the financial year related to the assessment year 2017–18.

Bank Plans to Challenge the Order

The public sector bank has said it will challenge the order before the appropriate authority as per legal procedures. According to the bank, it is currently preparing to contest the disallowances and additions mentioned in the tax order. IOB also stated that it has adequate factual and legal grounds to defend its position and expects relief from the authorities.