Dr Reddy’s Gets Rs 2,395-Cr Tax Notice

New Delhi: Dr Reddy’s Laboratories Ltd has received a show-cause notice from the Income-Tax (I-T) Department, proposing a demand of over Rs2,395 crore. The notice is related to the merger of Dr Reddy’s Holdings Ltd (DRHL) with the company.

In a regulatory filing, Dr Reddy’s said it received the notice on April 4, 2025, from the office of the Assistant Commissioner of Income-Tax in Hyderabad. The notice questions why an assess-ment should not be made for income that is said to have escaped tax during the merger.

The merger of DRHL into Dr Reddy’s Laboratories was approved by the National Company Law Tribunal (NCLT), Hyderabad, on April 5, 2022. However, the merger was effective from April 1, 2019, as per the approved scheme. According to the filing, the tax department has proposed a demand of Rs2,395.81 crore. “The notice quanti-fies the proposed demand of Rs23,95,81,79,470,” the company said in its filing.

Responding to the notice, Dr Reddy’s said the merger followed all legal and tax-related proce-dures. The company said it firmly believes that no income has escaped taxation due to the mer-ger.

“The merger was done in full compliance with legal requirements, including those under the In-come Tax Act,” the company stated. It added that it is currently reviewing the details and will respond to the authorities with the necessary information. “Nonetheless, the company is review-ing the information and clarifications required in the show-cause notice and will respond, as re-quired, appropriately,” the company stated. Dr Reddy’s also said that, as per the merger agreement, the company’s promoters are responsible for covering any liabilities arising from the merger.