Dr Reddy's Faces Rs 2,395 Crore I-T Notice Over Merger

New Delhi, Apr 5 (PTI) 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 from it related to the merger of Dr Reddy's Holding Ltd (DRHL) with itself.

The company has received a show cause 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.

It requires the company to respond as to why notice should not be issued for assessment of income alleged to be escaped from tax consequent 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 said scheme of amalgamation was carried 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 said it strongly believes that there is no escaping of tax pursuant to the said merger scheme.

"Nonetheless the company is reviewing the information and clarifications required in the show cause notice and will respond, as required, appropriately," it said.

DRL further said the scheme also 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 authorised by it (excluding the promoters) for any liability, claim, or demand, which may devolve upon the company on account of this amalgamation.