Dr Reddy's gets HC stay on tax reassessment over merger with holding co
This story was originally published at 19:18 IST on 26 August 2025
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HYDERABAD - Dr. Reddy's Laboratories Ltd. Tuesday said it has secured an interim stay order from the Telangana High Court in connection with income tax reassessment proceedings for assessment year 2020-21 (Apr-Mar). The stay halts reassessment of transactions related to the company's merger with Dr. Reddy's Holdings Ltd., a promoter holding entity.
The Assistant Commissioner of Income Tax, Hyderabad, had issued a notice on Apr. 4 and an order on May 30 to reassess tax for assessment year 2020-21, alleging that the merger of Dr. Reddy's Holdings with Dr. Reddy's Laboratories was not reflected in the tax filings, terming it a tax evasion. In response, Dr. Reddy's filed a writ petition in the Telangana High Court to quash the reassessment order, arguing that no tax evasion occurred.
The National Company Law Tribunal, Hyderabad, had approved the scheme of amalgamation on Apr. 5, 2022, with an appointed date of Apr. 1, 2019, under which Dr. Reddy's Holdings merged into Dr. Reddy's Laboratories. However, the Income Tax Department has raised a demand of INR 23.95 billion, claiming the company escaped tax liability from the merger.
Dr. Reddy's has maintained that the merger fully complied with legal and tax provisions and expects no material financial impact. The merger agreement also carries an indemnity clause under which promoters are responsible for any liabilities arising from the amalgamation.
On Tuesday, shares of Dr. Reddy's ended at INR 1,263.20 on the National Stock Exchange, down 1.6% from their previous close. End
Reported by Narayana Krishna
Edited by Akul Nishant Akhoury
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