Cipla, a leading pharma company based in Mumbai, has received a tax demand notice of INR 773.44 crore from the income tax department. The notice covers assessment years 2015–16 to 2022–23. This information was disclosed by Cipla in a stock exchange filing on July 16.
The tax demand includes penalties for violations related to weighted deductions, short deductions, and disallowed expenses. Refunds of taxes are not included in this INR 773.44 crore demand.
Cipla has acknowledged receipt of the tax demand in its regulatory filings and stated its intention to appeal the order. Cipla's statement claims that the tax demands are not applicable under the law.
The income tax authorities have pointed out that Cipla violated rules regarding weighted deductions. These deductions allow companies to deduct business-related costs but prohibit short deductions.
A short deduction occurs when the tax deducted is less than the specified rate. Companies that invest in research and knowledge capacity are eligible for weighted deductions.
On July 26, Cipla will release its quarterly results for Q1 FY24-25. In the previous quarter, Cipla reported a consolidated net profit of INR 939.04 crore. This was an increase of 78.64 per cent year over year, driven by higher demand in key regions.
During a conference call, Cipla's MD and global CEO, Umang Vohra, mentioned that the company is planning to introduce new products, including obesity medications, which have a large market in India.
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