Akums Subsidiaries Face Rs 25 Crore Tax Demands

Akums Drugs and Pharmaceuticals Limited announced that its wholly-owned subsidiaries have received income tax assessment orders. The total tax demand across these subsidiaries amounts to approximately Rs 25.31 crore.

Tax Demands Issued

Four subsidiaries – Maxcure Nutravedics Limited (MNL), Pure and Cure Healthcare Private Limited (PCHPL), Malik Lifesciences Private Limited (MLPL), and Nicholas Healthcare Limited (NHL) – received assessment orders from the Income Tax Department. These orders cover the period from April 1, 2018, to March 12, 2025.

The specific demands are:

• Maxcure Nutravedics Limited: Rs 15.24 crore
• Pure and Cure Healthcare Private Limited: Rs 5.77 crore
• Malik Lifesciences Private Limited: Rs 0.80 crore
• Nicholas Healthcare Limited: Rs 0.45 crore

These demands primarily stem from the disallowance of various expenditures, as per Section 37(1) of the Income Tax Act.

Company's Stance and Next Steps

Despite the significant total demand, Akums expressed confidence that these orders will not have a material financial impact. The company stated that the demands are not legally sustainable and are defensible on factual grounds. Consequently, the subsidiaries will proceed with appealing these assessment orders.

Potential Risks

The primary risk for Akums lies in the possibility that some or all of these tax demands could be upheld during the appeals process. Such an outcome could place financial strain on the subsidiaries. However, the company's management appears confident in its legal and factual arguments for appeal.

Context on Tax Assessments

Income tax assessments and subsequent appeals are a standard part of regulatory compliance for companies in India. These orders relate to a review of financial activities during a specific block period. The disallowance of expenditures is a common point of focus during tax audits.