Tata Steel Challenged with New Tax Order Post Bhushan Steel Merger

In a significant legal development, Tata Steel is contending with an income tax order that heightens its taxable amount for fiscal year 2019. This order is tied to the merger of Bhushan Steel with Tata Steel, subsequently renamed as Tata Steel BSL Limited, which was completed in 2019. Initially announced in May 2018, Tata Steel acquired Bhushan Steel via its subsidiary Bamnipal Steel, leading to a debt waiver of Rs 25,185.51 crore for Tata Steel BSL Limited. Following a recent assessment, Tata Steel was issued a show-cause notice on March 13, 2025, requesting further documentation regarding this debt waiver for taxable income reassessment purposes for the assessment year 2019-20. Despite the initial acceptance of Bhushan Steel's income tax return, a reassessment order increased Tata Steel's taxable income for FY 2018-19 by the waived amount. Subsequently, Tata Steel filed a writ petition with the Bombay High Court, challenging certain technical details and arguing against treating the debt waiver as taxable income. Tata Steel maintains that it has a strong case and continues to seek legal remedies.