R. K. Fashion Accessories reports ₹33.24 lakh tax demands

R. K. Fashion Accessories Limited has disclosed ₹33.24 lakh in outstanding income-tax and tax deducted at source, or TDS, demands. Two assessment-year 2018-19 income-tax matters account for ₹32.03 lakh, while the company’s March 20, 2026 Materiality Policy sets its lowest numerical threshold at ₹15.39 lakh.

What makes R. K. Fashion Accessories’ ₹33.24 lakh tax demands material?

R. K. Fashion Accessories reports three outstanding direct income-tax demands shown at ₹33.23 lakh in its tax-proceedings table, alongside TDS demands of Rs 800, producing the disclosed ₹33.24 lakh aggregate. The income-tax matters are demands under Section 143(1) of the Income Tax Act, 1961, while the table records no indirect-tax goods and services tax, or GST, proceedings against R. K. Fashion Accessories.

R. K. Fashion Accessories adopted its Materiality Policy at a board meeting on March 20, 2026. For litigation with a quantifiable monetary amount, the policy uses the lower of 2% of turnover, or ₹60.71 lakh; 2% of net worth, or ₹32.32 lakh; and 5% of the average absolute profit or loss after tax for the last three annual restated consolidated financial statements, or ₹15.39 lakh.

The largest individual income-tax demand is ₹30.56 lakh, including accrued interest, and is above the policy’s lowest ₹15.39 lakh benchmark. The policy also requires disclosure where the decision in one case could affect similar cases whose aggregate amount exceeds the applicable threshold, or where a matter below the numerical threshold could materially affect business, operations, performance, prospects, financial position or reputation.

R. K. Fashion Accessories says that, except for the matters stated in the litigation section, it had no outstanding direct- or indirect-tax claims that were material under the policy as of the draft red herring prospectus date. The same section reports no outstanding criminal proceedings, regulatory actions or other pending material litigation against R. K. Fashion Accessories.

Which assessment years account for R. K. Fashion Accessories’ tax demands?

Assessment year 2018-19 accounts for ₹32.03 lakh, or roughly 96% of R. K. Fashion Accessories’ disclosed ₹33.24 lakh company-level tax-demand aggregate. The amount comprises two Section 143(1) income-tax demands: ₹30.56 lakh and ₹1.47 lakh, both listed for assessment year 2018-19.

The larger assessment-year 2018-19 demand consists of a stated demand of ₹21.9866 lakh and accrued interest of ₹8.57454 lakh, totalling ₹30.56114 lakh before rounding in the prospectus table. The other assessment-year 2018-19 matter consists of a stated demand of ₹1.058 lakh and accrued interest of ₹41,262, totalling ₹1.47062 lakh.

Together, the two assessment-year 2018-19 matters include accrued interest of ₹8.98716 lakh. The prospectus gives the same demand reference number, 20222018370015 25540C, for the ₹30.56 lakh matter and the separately listed ₹1.47 lakh matter, with the second reference continuing across pages 330 and 331.

Assessment year 2019-20 contributes ₹1.19 lakh, comprising a stated demand of ₹1.0378 lakh and accrued interest of ₹15,555. The two TDS defaults are much smaller at Rs 800 combined: Rs 360 for 2025-26 and Rs 440 for 2018-19. The disclosed position is therefore driven by income-tax demands, particularly the assessment-year 2018-19 matters, rather than TDS.

The prospectus uses assessment years for income-tax demands and years for TDS defaults. It does not state whether R. K. Fashion Accessories has paid, challenged, settled or otherwise resolved any of the three income-tax demands or the two TDS defaults, and it gives no timetable for their disposal.

How does R. K. Fashion Accessories’ materiality policy determine disclosure?

R. K. Fashion Accessories’ ₹15.39 lakh benchmark is the operative numerical threshold because it is lower than the ₹32.32 lakh net-worth measure and the ₹60.71 lakh turnover measure. The policy uses financial inputs from the latest annual restated consolidated financial statements, rather than a separate calculation of expected cash payment for each tax matter.

The policy also establishes a qualitative disclosure route. A proceeding with an unquantifiable monetary liability, or one below the stated numerical threshold, can be material if its outcome may materially affect R. K. Fashion Accessories’ business, operations, performance, prospects, financial position or reputation.

The prospectus does not describe a qualitative materiality assessment for the Rs 800 TDS demands. It separately identifies all five company-level tax demands in the tax-proceedings table, meaning the tax disclosure should not be read as an estimate of provisions, payments or final liability.

What other legal matters does R. K. Fashion Accessories disclose?

R. K. Fashion Accessories reports no outstanding criminal proceedings initiated by or against it as of the draft red herring prospectus date. It also reports no outstanding actions by statutory or regulatory authorities against it, and no other pending material litigation filed by or against R. K. Fashion Accessories.

The disclosure gives the same absence of listed proceedings for promoters and directors. It also states that no Securities and Exchange Board of India, or SEBI, or stock-exchange penalties had been imposed on the promoters during the preceding five financial years, and that no outstanding SEBI or stock-exchange actions against them were reported.

For key managerial personnel and senior management, the table identifies one ₹2,875 income-tax demand against Khurshid Alam, described as managing director and chief financial officer, for assessment year 2017-18. The amount includes a stated demand of ₹1,540 and accrued interest of ₹1,335, and is separate from R. K. Fashion Accessories’ ₹33.24 lakh company-level tax-demand aggregate.

R. K. Fashion Accessories separately applies a creditor materiality threshold of more than ₹19.40 lakh, approved by the board on March 20, 2026. That threshold equals 5% of ₹388.00 lakh in trade payables as of March 31, 2026, and is distinct from the ₹15.39 lakh litigation threshold used in the Materiality Policy.

Conclusion

R. K. Fashion Accessories’ disclosed tax exposure is concentrated in older income-tax assessments: ₹32.03 lakh of the ₹33.24 lakh aggregate relates to assessment year 2018-19, and the ₹30.56 lakh largest demand includes ₹8.57454 lakh of accrued interest. The litigation section otherwise reports nil GST proceedings and no other outstanding material litigation or regulatory actions against R. K. Fashion Accessories.

The next development to watch is the status of the three income-tax demands and two TDS defaults, especially the two assessment-year 2018-19 matters. R. K. Fashion Accessories does not disclose an appeal, payment, settlement, provision or resolution plan, so a later company update or tax-proceeding outcome would be needed to establish whether the outstanding amounts change.