The penalty has been imposed by the Office of the Additional Commissioner, Central Goods & Service Tax, Ahmedabad South, Ahmedabad. The order, passed under Section 74 of the CGST Act, confirms a penalty of Rs 637.90 crore along with applicable tax demand and interest.

The order alleges short payment of tax and excess availment of Input Tax Credit (ITC). The company said The maximum financial impact is to the extent of tax demand, interest and penalty levied.

Vodafone Idea stated that it does not agree with the order and will take appropriate legal action against it.

The company received the show-cause notice on 31 December 2025, while the disclosure was made through an official filing on 1 January 2026 after market hours.

India's third-largest telecom operator, Vodafone Idea is backed by Aditya Birla Group and Vodafone Group. The company holds 5G spectrum in 17 circles and mmWave spectrum in 16 circles, offering services across 2G, 4G and expanding 5G networks.

The telco reported a consolidated net loss of Rs 5,524 crore in Q2 FY26, narrowing from a net loss of Rs 7,175.90 crore in the same quarter last year. Net sales increased 2.3% to Rs 11,169.60 crore in Q2 FY26 compared with Rs 10,918.20 crore posted in the same quarter last year.

The counter rose 0.95% to Rs 11.73 on the BSE.