Pharma major Alkem Labs under I-T scanner for large-scale tax evasion, say sources

The Income Tax department’s Investigation Wing probing pharma major Alkem Laboratories has unearthed large-scale tax evasion by the company. The Income Tax department found the company claimed bogus and excessive deductions for its manufacturing units at Sikkim, as per sources aware of the matter.

The alleged bogus deductions are said to be worth around Rs 1,000 crore. Many such deductions were claimed under special sections like 80 IC by the firm, sources noted. Investigations also revealed that the pharma major was making payments worth hundreds of crores of rupees to doctors and medical practitioners to get prescriptions written for drugs made by their Alkem Labs.

In September last year, the I-T department carried out surveys on the offices and premises of Alkem Labs after receiving information about large amounts of tax evasion by the pharma major. The investigation in the matter is still underway as the Income Tax department is recording the statements of concerned officials and checking the data and balance sheets of the company.

Meanwhile, the pharma major said in a statement media reports suggesting that the company is involved in tax evasion are "factually incorrect". "We categorically deny these allegations and rumours as published in these articles and state that the information published is factually incorrect. We would also like to specifically state that we are not aware of any information that could have an impact on the trading of the Company's equity shares. The publication of these articles do not have any material impact on the Company," Alkem Labs said.

Alkem Labs also mentioned that it has fully cooperated with the Income Tax department officials during the survey proceedings in September 2023.

"The Company asserts its commitment to compliance and transparency, having fully cooperated with the Income Tax Department officials during their survey proceedings in September 2023. The Company had subsequently received certain queries from the IT department, which have been addressed by the Company.The Company remains committed to follow principles of the best corporate governance and ethical business practices," the statement further read.

Alkem Labs has a portfolio of 705 branded generic drugs, with 13 of them featured among the top 300 brands in India for the fiscal year 2015. Alkem has 21 manufacturing facilities, 19 in India and 2 in the US.

The pharma major was established in 1973 as a healthcare marketing firm by founders Late Samprada Singh and his brother BN Singh. Alkem Labs started manufacturing in 1978 when it set up its first plant in Mumbai's Taloja. Alkem is ranked the fifth largest pharmaceutical company in India in terms of domestic sales. The company also has presence in over 40 international markets, with the US being a key focus market.

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