Central Board Of Direct Taxes Alleges Business, Tax Irregularities Against Dolo-650 Drugmaker: Know More

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Central Board Of Direct Taxes Alleges Business, Tax Irregularities Against Dolo-650 Drugmaker: Know More

The evidence suggests that the pharmaceutical company has adopted unethical practices to promote its products/ brands, and the quantum of such freebies detected is estimated to be about Rs 1,000 crore.

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The Central Board of Direct Taxes, on Wednesday, July 13, charged the makers of the Dolo-650 medicine tablet with indulging in "unethical practices" and distributing freebies of around ₹1,000 crores to doctors and medical professionals in trade for the promotion of products manufactured by the drugmaker.

The claims came to light after the Income Tax department had, on July 6, raided 36 establishments of Bengaluru-based Micro Labs Ltd. across nine states.

After the action against the pharmaceutical company, the CBDT said in a statement that the department seized "unaccounted" cash of ₹1.20 crore and precious jewellery of gold and diamond of ₹1.40 crore.

An email sent to Micro Labs Ltd. seeking its reply on the claims made by the administrative body for the I-T department remained unanswered.

Findings Of The Search Operation

During the search operations, the IT department found and seized substantial incriminating evidence in the form of documents and digital data. The department said the preliminary gleaning of the evidence has revealed that the drugmaker has been debiting in its books of account unallowed expenses on account of the distribution of freebies to the doctors and medical professionals under the head 'sales and promotion.'

The CBDT alleged these "freebies included travel expenses, perquisites and gifts etc., to doctors and medical professionals for promoting the group's products under the heads 'promotion and propaganda', 'seminars and symposiums', 'medical advisories' etc.," quoted NDTV.

The evidence suggests that the pharmaceutical company has adopted unethical practices to promote its products/ brands, and the quantum of such freebies detected is estimated to be about Rs 1,000 crore.

While the CBDT statement did not recognise the group, sources confirmed it as Micro Labs Ltd.

Certain Other Irregularities Revealed

The department also alleged certain other irregularities on the part of the Dolo-650 medicine tablet makers, which claimed that "artificially inflated deduction under special provisions in respect of certain incomes, by resorting to suppression of expenses and over-appropriation of revenue to the unit eligible for such deduction."

The CBDT revealed that various other means of tax evasion, including inadequate allocation of research and development expenses to eligible units and inflated claim of weighted deduction under section 35 (2AB), have also been detected, and the quantum of tax sought to be "evaded" through such means is estimated at more than ₹300 crores, reported The Hindu.

Further, the department also found instances of "violation" of tax deduction provisions at source (TDS) under section 194C of the I-T Act regarding transactions under contracts entered into with the third-party bulk drug manufacturers.

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