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Dr Reddy's Labs shares in focus after I-T dept issues order over Rs 2,396 crore tax demand

Following Dr Reddy's Labs' response to the initial notice, the Income Tax Authority issued an Order on May 30, 2025, justifying the demand notice. Synopsis The Income Tax Department has raised a demand of over Rs 2,395 crore linked to Dr Reddy's Labs' past merger. The company asserts full compliance with tax laws and says there's no material financial impact. Shares of Dr Reddy's Laboratories will be in focus on Monday after the pharmaceutical major received a tax demand of over Rs 2,395 crore from the Income Tax Department for the assessment year 2020–21. The demand is linked to the merger of Dr Reddy's Holdings into Dr Reddy's Laboratories under a scheme of amalgamation. ADVERTISEMENT The company disclosed receiving a show cause notice on April 4, 2025, from the I-T Department. This notice required Dr Reddy's to demonstrate why its tax returns for the Assessment Year 2020-21 should not be reassessed. Following the company's response to this initial notice, the Income Tax Authority issued an Order on May 30, 2025, justifying the demand notice. Dr Reddy's has stated that the scheme of amalgamation, which was approved by the National Company Law Tribunal (NCLT) in Hyderabad on April 5, 2022, with an effective date of April 1, 2019, was carried out in adherence to all legal requirements, including tax company added that it 'strongly believes there has been no escapement of income' due to the amalgamation. It also stated that the development is not expected to have any material impact on its financials, operations, or activities at this stage, and it is currently reviewing the order and taking necessary steps.'Based on our assessment, there is no material impact on the financials, operations, or other activities of the company at this stage,' it said in a statement. ADVERTISEMENT Also Read: India's top 10 priciest stocks in 2025: MRF to Elcid, see who tops the list According to Trendlyne, the average target price for Dr Reddy's Labs is Rs 1,271, indicating a potential upside of nearly 2% from current levels. Among 38 analysts covering the stock, the consensus rating is 'Hold'. ADVERTISEMENT Also Read: Ola Electric, Kalyan Jewellers among 10 firms where promoters pledge increased in Q4 Shares of Dr Reddy's are down 9% year-to-date but have risen 12% over the past three months. The company's current market capitalisation stands at Rs 1,04,448 crore. ADVERTISEMENT (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel) Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? SEBI warns of securities market frauds via YouTube, Facebook, X and more SEBI warns of securities market frauds via YouTube, Facebook, X and more API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders Security, transparency, and innovation: What sets Pi42 apart in crypto trading Security, transparency, and innovation: What sets Pi42 apart in crypto trading Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains The rise of Crypto Futures in India: Leverage, tax efficiency, and market maturity, Avinash Shekhar of Pi42 explains NEXT STORY