Tata Steel gets NCLT approval for ₹427 crore tax relief

Tata Steel Limited received NCLT approval for its merger with wholly owned subsidiary Rujuvalika Investments Ltd. Separately, a tax ruling could reduce its tax exposure by ₹427 crore. The Mumbai Bench of the National Company Law Tribunal approved the Scheme of Amalgamation between Tata Steel Limited and Rujuvalika Investments Ltd on October 1, 2026. The scheme was originally proposed in July 2024 under Sections 230 to 232 of the Companies Act, 2013. The merger simplifies the group structure by bringing the wholly owned subsidiary into Tata Steel. The immediate financial impact is likely to be limited, but the consolidation can reduce structural complexity and make the group's corporate structure easier to manage. The more direct financial benefit comes from the separate Income Tax Appellate Tribunal ruling. Tata Steel said the order allows its claim for deduction of interest expenditure and reduces the tax exposure in the matter from ₹1,901 crore to ₹1,474 crore, a reduction of about ₹427 crore. For FY2008, another favourable order could reduce the exposure from ₹1,901 crore to ₹1,686 crore after the Assessing Officer passes the consequential order. My view is that the tax relief is more relevant to near-term financials than the merger itself. The merger is mainly a structural change, while the tax ruling can reduce a disputed liability. I would watch the implementation of the merger and the consequential tax order, along with Tata Steel's next results for any impact on reported provisions and cash flows. Call: Positive for balance-sheet visibility, with the tax outcome more relevant to near-term numbers.

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