Tata Steel’s ₹25,185 Cr Tax Dispute Explained: Impact on Stock, Business & Future Growth
Business and Industry Overview:
Tata Steel is one of the biggest and oldest steel companies in India. It started in 1907 and is part of the Tata Group. Its head office is in Mumbai. The first steel plant was set up in Jamshedpur. Tata Steel can make 34 million tonnes of steel every year. It works in many countries and sells steel all over the world. In 2020, it earned 19.7 billion US dollars, not counting Southeast Asia. It has more than 65,000 workers. It is known as a good place to work. The company makes many steel products like pipes, sheets, rods, and coils. These are used in buildings, cars, machines, and packaging. Tata Steel cares about nature and fair work. It is part of global groups that support clean and responsible steel-making. It has won many awards for good work, ethics, safety, and care for the environment. Its Kalinganagar plant got world recognition. Tata Steel also grew by buying companies like Corus in the UK. Its shares are listed on the stock market. The company is trusted in India and abroad. It is known for strong steel, honest work, and long-term growth.
Latest Stock News:
Tata Steel got a notice from the Income Tax Department. This is about a debt waiver related to the company Bhushan Steel, which Tata Steel bought in 2018. In May 2018, Tata Steel (through its company Bamnipal Steel) took over Bhushan Steel. This happened under the Insolvency and Bankruptcy Code (IBC), which is a law used to help companies in heavy debt. After the takeover, ₹25,185.51 crore of Bhushan Steel’s debt was waived off (cancelled). Later, Bhushan Steel was renamed Tata Steel BSL, and both it and Bamnipal Steel were merged into Tata Steel in November 2021. Now, the tax department wants to look again at this debt waiver. They want to check if this amount should be counted as taxable income for the financial year 2018–19 (Assessment Year 2019–20). On March 13, 2025, Tata Steel received a show cause notice. The tax office asked for more documents to reassess the case. But Tata Steel said that the income tax return of Bhushan Steel was already accepted in June 2020, and no tax was asked at that time for the debt waiver. To fight this, Tata Steel filed a case (called a writ petition) in the Bombay High Court on March 24, 2025. They are challenging the tax officer’s authority to reopen this old case. Later, on March 31, 2025, the company received a new assessment order from the tax office. This order increased the taxable income by including the waived debt. But the order also said Tata Steel can still submit documents to finalize how much tax is to be paid. Tata Steel says this reassessment is not correct, both legally and technically. The company believes that a debt waiver during an IBC acquisition should not be taxed. They are now preparing to fight this order in court and believe they have a strong case.
Potentials:
Tata Steel has many plans. It wants to become better, cleaner, and smarter. One big goal is to use more digital tools. This means using computers, machines, and data to make steel faster and smarter. Tata Steel wants to be a leader in digital steelmaking by 2025. The company also cares about the environment. It wants to stop polluting the air. Tata Steel plans to become “Net Zero” by the year 2045. Net Zero means it will not add extra carbon to the air. To do this, it will use new machines and better technology. In the UK, Tata Steel wants to change its factory. It wants to make steel more cleanly. This change will help reduce 90% of the pollution. In the Netherlands, the company is also working on green steel. It has a plan for the next 10 to 15 years to make its steel process more eco-friendly. In India, Tata Steel is growing. It is making its Kalinganagar plant bigger. This will help the company make more steel at a lower cost. In the UK, it is also trying to cut costs. It is removing extra fixed costs to save money. Tata Steel is also testing new ways of making steel. One method is called the HIsarna process. This process produces less carbon and does not need special filters. The company is also thinking of using nuclear energy. It may build small nuclear plants. These will give clean power. The power will be used to make green steel. Tata Steel plans to install 200 small nuclear reactors. Tata Steel’s future is about smart work, clean energy, and growth. It wants to make strong steel without harming the earth. It wants to lead the steel industry in a better way.
Analyst Insights:
- Market capitalisation: ₹ 1,75,256 Cr.
- Current Price: ₹ 140
- 52-Week High/Low: ₹ 185 / 123
- P/E Ratio: 61.9
- Dividend Yield: 2.56%
- Return on Capital Employed (ROCE): 7.02%
- Return on Equity (ROE): 6.55%
Tata Steel is not doing well in recent times. Its total income has gone down. In December 2021, it was ₹60,783 crore. But in December 2024, it came down to ₹53,648 crore. Its profit is also not stable. Sometimes, the company is making a loss. The profit margin is falling. It was 26% in December 2021. Now it is just 11%. This means the company is earning less money after expenses.
Its returns are also low. ROCE is 7.02% and ROE is 6.55%. These numbers show that the company is not using its money well. Tata Steel has a high debt. It has borrowed ₹99,392 crore. That is a lot of money to repay. Also, the stock is expensive. Its P/E ratio is 61.9. This is much higher than other steel companies like Jindal Steel (P/E 11.9) and SAIL (P/E 19.8).
The company gives good dividends. It also has plans to grow in the future. But right now, the business is weak. So, it is better to hold the stock. Do not buy more. Also, do not sell in a hurry. Wait and watch how the company performs in the future.