Troubled telecom operator Vodafone Idea Ltd (Vi) on Thursday informed stock exchanges that it has received a penalty order of ₹637.91 crore from the Office of the Additional Commissioner, Central Goods and Services Tax (CGST), Ahmedabad South, under the Central Goods and Services Tax Act, 2017.
In a regulatory filing under Regulation 30 of the SEBI Listing Regulations, the company said the order was issued under Section 74 of the CGST Act, confirming a penalty amounting to ₹6,37,90,68,254, along with applicable tax demand and interest.
The order, received on December 31, 2025, relates to allegations of short payment of tax and excess availment of input tax credit, Vodafone Idea said.
The telecom operator stated that the maximum financial exposure would be limited to the tax demand, interest and penalty specified in the order. However, the company made it clear that it does not agree with the ruling and intends to challenge it through legal means.
“The Company does not agree with the Order and will take appropriate legal action(s) against the same,” Vodafone Idea said in its filing.
Promoter support provides relief
The disclosure comes at a time when Vodafone Idea has recently announced financial support from its promoter, Vodafone Group. As per earlier regulatory filings, Vi is set to receive around ₹5,836 crore following a revision to the liability settlement agreement between the two entities.
Under the amended arrangement, Vodafone Group will release ₹2,307 crore in cash to Vodafone Idea over the next 12 months. Additionally, Vodafone Group has earmarked its entire holding of 328 crore shares in Vi for the company’s benefit.
As part of the revised pact, Vodafone Idea can instruct Vodafone Group to sell these shares in one or more tranches, with the proceeds to be transferred to Vi. As of the amendment date, the market value of these shares stood at ₹3,529 crore.
Background of the agreement
The arrangement originates from the Contingent Liability Adjustment Mechanism (CLAM) established during the 2017 merger of Vodafone India and Idea Cellular. CLAM was designed to address pre-merger contingent liabilities linked to legal, regulatory and tax matters.
Initially, Vodafone Group’s maximum exposure under CLAM was capped at ₹8,369 crore, which was later reduced to ₹6,394 crore after accounting for earlier payments. The agreement was earlier set to expire on December 31, 2025, following an extension.
After the latest amendment to the Implementation Agreement, Vodafone Idea is now expected to receive approximately ₹5,836 crore, offering some financial cushion as the company continues to operate under high debt and regulatory pressures.
