Unacademy Parent Company Sees Reduced Losses but Faces Tax Challenges

Sorting Hat Technologies, the parent company of Unacademy, reduced its standalone losses to Rs 284.3 crore in FY24. Despite a small drop in income and ongoing net worth erosion, it's facing a Rs 537.2 crore tax demand notice for past years, which the company is contesting.

Sorting Hat Technologies, the parent company of the prominent edtech platform Unacademy, has succeeded in narrowing its standalone losses to Rs 284.3 crore for the fiscal year 2023-24. This marks a significant reduction from the Rs 1,591.2 crore loss reported in the previous fiscal year, FY23, according to data released by Tofler.

The company experienced a slight decline in total income, which fell to Rs 864.3 crore in FY24, down from Rs 868.8 crore in the previous year. Despite holding a full stake in Unacademy, Sorting Hat Technologies is grappling with a tax demand notice of Rs 537.2 crore from authorities concerning the applicability of withholding tax on ESOPs, stock incentives, and year-end provisions for the period between 2020-21 and 2022-23.

In response, Sorting Hat has lodged an appeal with the commissioner of Income-Tax (Appeals) and remains hopeful that the issue will resolve in their favor. Meanwhile, the company's net worth continues to erode, shrinking to Rs 1,078.7 crore in FY24 from Rs 1,189.17 crore in FY23, following a substantial reduction from Rs 2,285.53 crore in FY22. Attempts to reach Unacademy for comment have yet to yield a response.

(With inputs from agencies.)