Urban Company received tax demand & penalty notice of ₹56.43 cr
The notice spans four fiscal years, from April 2021 to March 2025
The crux of the matter is the interpretation of Section 9(5) of the CGST Act
Urban Company has received a tax demand and penalty notice totalling ₹56.43 crore from the Thane GST authorities for the period between April 2021 and March 2025, the company said in a stock-exchange filing.
The notice includes a principal tax demand of about ₹51.3 crore, a penalty of roughly ₹5.13 crore, and applicable interest.
1 December 2025
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The demand is based on the tax department’s interpretation of Section 9(5) of the Central GST Act, which can make e-commerce operators liable to pay GST on certain notified services. Thane GST officials have taken the view that services such as appliance repair, servicing and painting fall under an expanded definition of “housekeeping,” for which the platform, rather than individual service providers, is responsible for discharging GST.
Based on this interpretation, the authorities have sought GST on amounts paid by Urban Company to professionals offering these services through its platform.
Urban Company’s Response
Urban Company said it has historically charged 5% GST on payouts to professionals for services it classified as housekeeping, such as plumbing, carpentry, electrical work and cleaning, and that the tax authority’s broader interpretation of this category has led to the latest demand.
The company said it will challenge the order and file an appeal, adding that its position is supported by external legal and tax advisers. Urban Company also told investors that the notice will not have any impact on its financial or operational activities.
The Thane order is the latest in a series of disputed tax claims against the company. Urban Company said it is already dealing with at least three other GST notices, together amounting to about ₹51.3 crore, from Haryana, Maharashtra and Tamil Nadu. These relate to issues including the scope of housekeeping services, the treatment of commission income and valuation matters, and all of them are being contested by the company.
Financial Context
Urban Company, founded in 2014 and listed in September 2025, operates a marketplace that connects service professionals with consumers and has in recent years expanded into consumer electronics through its ‘Native’ line, as well as quicker domestic services such as its ‘Insta Help’ 15-minute maid booking.
In Q2 FY26, the company reported operating revenue of ₹380 crore, up 37% year-on-year, but slipped to a consolidated net loss of ₹59.3 crore, compared with a marginal loss in the same period a year earlier. Its shares ended 3.14% lower at ₹126.60 on Friday after the disclosure.
Urban Company said it will follow the statutory appeals process to challenge the Thane GST order. The outcome, and whether tax authorities’ broader interpretation of Section 9(5) is upheld, could have wider implications for how marketplace platforms across states handle GST on payouts to gig and contract workers.
