Urban Company has received a goods and services tax demand and penalty amounting to Rs 56.43 crore from Maharashtra GST authorities, intensifying an ongoing dispute over the tax treatment of certain services offered on its platform. The order relates to how specific home services should be classified under the GST framework.
In a regulatory filing, the Gurugram-based company stated that an order was passed by the Joint Commissioner of CGST and Central Excise, Thane, on December 19, 2025. The order confirms a GST demand of Rs 51.30 crore along with a penalty of Rs 5.13 crore for the period between April 2021 and March 2025. Interest is also applicable under provisions of the CGST Act, 2017.
Urban Company has said that it will challenge the order before the appropriate appellate authority. According to the company, the demand has been raised due to a difference in interpretation of GST provisions applicable to ecommerce platforms providing certain notified services.
Tax Classification Dispute
The dispute centres on Section 9(5) of the CGST Act, which places the liability to pay GST on ecommerce operators for specific categories of services. Urban Company has maintained that it has been paying GST at a rate of 5 percent on payments made to service professionals offering plumbing, carpentry, electrician, and cleaning services.
These services have been classified by the company as housekeeping services under existing GST rules. However, the Thane GST authority has taken a broader view of the definition, stating that housekeeping services should also include appliance repair, appliance servicing, and painting services.
Based on this interpretation, the tax department raised a demand on payouts made to professionals who provided these additional services during the review period. Urban Company has stated that it disagrees with this view and believes the demand is not sustainable on legal grounds.
Company Response
In its filing, Urban Company said it has a strong case supported by external legal and tax advisors. The company also stated that the order is not expected to have any impact on its financial position, business operations, or ongoing activities at this stage.
This is not the first time the company has faced GST-related scrutiny. Urban Company is currently contesting at least three other GST demand notices issued by authorities in different states, with the total disputed amount exceeding Rs 51 crore.
In Haryana, a demand of Rs 20.4 crore has been issued over an expanded interpretation of housekeeping services and alleged mismatches between GSTR-2A data and input tax credit claimed for 2018–19. Maharashtra authorities have also raised a separate demand of Rs 14.6 crore related to GST on commission income earned in the state but deposited in Haryana.
Tamil Nadu authorities have issued a Rs 15.97 crore demand after considering the full value of services supplied on the platform. All these cases are currently under dispute.
Business Context
Founded in 2014, Urban Company operates a hyperlocal services marketplace that connects consumers with service professionals across categories such as home maintenance, cleaning, and beauty services. In recent years, the company has diversified into consumer electronics through its ‘Native’ product line and introduced ‘Insta Help’, a rapid maid-booking service.
On the financial front, Urban Company reported a net loss of Rs 59.3 crore in the second quarter of FY26, compared with a loss of Rs 1.8 crore in the same period last year. Operating revenue rose 37 percent year on year and 4 percent sequentially to Rs 380 crore during the quarter.
As GST authorities continue to closely examine digital platforms, the outcome of these disputes is likely to have wider implications for service classification and tax liability across India’s growing online services economy.
