Byju's has been facing problems one after another. In a very recent move, the Income Tax Department has reportedly issued demand notices for unpaid Tax Deducted at Source (TDS) to over 6,000 current and former employees of Byju's. This has been happening over the past 10 days. As of August 30, the Indian tax authorities have been demanding $101 million in dues from Byju's. The company is currently facing an insolvency process, and government authorities have submitted these claims to the Insolvency and Bankruptcy Board of India (IBBI). Mounting troubles may not be good for the company and it will further add to lack of customer and investor confidence.
Apparently Pankaj Srivastava, the resolution professional appointed by the National Company Law Tribunal, is tasked with inviting lenders, employees, vendors, and the government to file claims for outstanding dues. TDS is the portion of tax that the employer deducts from the employee's income and deposits with the Income Tax Department on behalf of the employee and that means that the TDS has not been promptly deposited by Byju's to the tax authorities.
“Byju's situation reflects the challenges faced by high-growth startups in managing financial stability and investor relations, especially in a volatile economic environment. The issuance of demand notices for unpaid TDS to over 6,000 employees highlights the severity of the company's financial troubles. The $101 million in tax dues and the ongoing insolvency process indicate that Byju's is struggling to meet its financial obligations,” said space and ed tech expert Girish Linganna.
This expert adds that the involvement of the Insolvency and Bankruptcy Board of India (IBBI) and the appointment of a resolution professional suggest that the company is in a critical phase of restructuring and debt resolution. “The disputes with US lenders and disagreements with investors have further compounded the company's difficulties. The impact on employees is significant, as they are now receiving demand notices for unpaid taxes, adding to the uncertainty and financial stress they may be experiencing,” added Linganna.
The company has faced numerous challenges, including disputes with US lenders, declining business, disagreements with investors, and eventually leading to insolvency. “Byjus's have been dealing with several challenges in quick succession. This shakes the confidence of the investors and challenges the narrative that a large Edtech player had presented to win the confidence of the seasoned investors. The company has to rejuvenate itself by a reset of strategy, onset of new thinking and significant shifts in the leadership team” Aditya Narayan Mishra the MD and CEO of CIEL HR told THE WEEK.
The company has fallen in stature from a unicorn achieving 22 billion $ valuation to experiencing a significant drop in valuation. “Byjus's is straddled with huge demands of outstanding statutory dues while continuing to fight debt repayments and poor investor perception. While its fight against insolvency and claims are going to take some time, Byjus should address the complaints against statutory dues and ensure its current or ex employees do not face any harassment from government authorities,” remarked Subramanyam S. founder and CEO of Ascent HR.