Dr Reddy's gets over Rs 2,395 crore show cause notice from I-T authority

"The notice quantifies the proposed demand of Rs 23,95,81,79,470," the company said.

Dr Reddy’s Laboratories Ltd on Saturday said it has received a showcause notice from the income tax authority with a proposed demand of over Rs 2,395 crore related to the merger of Dr Reddy’s Holding Ltd (DRHL) with itself.

The company received the showcause notice on April 4, 2025, from the office of the Assistant Commissioner of Income Tax, Hyderabad, Dr Reddy’s Laboratories Ltd said in a regulatory filing. The notice requires the company to respond as to why an assessment notice should not be issued for income alleged to have escaped tax due to the merger of DRHL into Dr Reddy’s Laboratories Ltd (DRL) under the scheme of amalgamation approved by the National Company Law Tribunal (NCLT), Hyderabad on April 5, 2022, the filing added.

"The notice quantifies the proposed demand of Rs 23,95,81,79,470," the company said.

DRL asserted that the scheme of amalgamation was carried out with adherence to all the legal requirements, including tax laws. "Further, this was approved by the Honorable NCLT, Hyderabad on April 5, 2022, with effect from the appointed date, April 1, 2019," it added.

The company further stated that it strongly believes there has been no tax escape following the said merger scheme. "Nonetheless, the company is reviewing the information and clarifications required in the showcause notice and will respond, as required, appropriately," it said.

DRL also mentioned that the scheme provides that the promoters of the company will jointly and severally indemnify, defend, and hold harmless the company, its directors, employees, officers, representatives, or any other person authorized by it (excluding the promoters) for any liability, claim, or demand, which may devolve upon the company on account of this amalgamation.