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Tax Shockwave: Alembic Pharma Faces Rs 332.1 Million Demand Over Input Credit Dispute

Updated: July 03, 2025 15:49

Image Source : Equitypandit
Alembic Pharmaceuticals Ltd has received a significant tax demand from the Central Goods and Services Tax (CGST) authorities, totaling Rs 332.1 million. The notice includes Rs 228.3 million in disputed tax and Rs 103.8 million in interest, stemming from alleged irregularities in input tax credit claims. The development has raised concerns over compliance scrutiny in the pharmaceutical sector and its potential financial implications.
 
Key Highlights of the Tax Demand
  • The CGST department issued a demand notice to Alembic Pharmaceuticals for excess input tax credit claimed  
  • The total liability includes Rs 228.3 million in tax and Rs 103.8 million in accrued interest  
  • The company has not disclosed any penalty component at this stage  
  • Alembic is currently evaluating legal options and may contest the demand through appropriate channels  
Regulatory Context and Compliance Landscape
  • The demand arises under provisions of the CGST Act, which governs the claiming and reconciliation of input tax credits  
  • Authorities have intensified audits and reconciliations across industries to curb misuse of credit claims  
  • Alembic’s case reflects growing scrutiny of highvalue transactions and interentity adjustments within corporate groups  
Financial and Operational Impact
  • Alembic has clarified that the demand does not materially impact its ongoing operations or liquidity  
  • The company maintains that its accounting and tax positions are backed by legal interpretations and documentation  
  • Investors are watching closely for updates on whether the company will settle, appeal, or seek relief under any available amnesty schemes  
SectorWide Implications
  • The pharmaceutical industry has seen increased regulatory oversight, especially in areas involving pricing, taxation, and export incentives  
  • Similar tax demands have been issued to other pharma firms, indicating a broader compliance sweep  
  • Companies are now revisiting their GST reconciliation processes and documentation standards to avoid future disputes  
As Alembic Pharmaceuticals navigates this tax challenge, the episode underscores the importance of robust compliance frameworks—where precision in tax filings can make the difference between routine audits and costly liabilities.
 
Sources: Economic Times, Business Standard, Moneycontrol, CNBC TV18, Mint Tax Desk, Alembic Corporate Filings, GST Department Circulars

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