Zydus Life Science , a prominent pharmaceutical company, has received a significant financial reprieve as tax authorities have withdrawn a substantial tax demand. This development marks a positive turn for the company, alleviating a considerable financial liability.

Tax Demand Details

Zydus Lifesciences announced that CGST authorities have concluded proceedings on tax demands totaling ₹39.25 crore. The authorities have dropped demands worth ₹35.90 crore while confirming a liability of ₹3.35 crore plus interest and penalty.

Resolution and Remaining Liability

The company had received show-cause notices from central excise and service tax authorities regarding alleged wrongful availment of CENVAT credit on input services from March 2008 to June 2017. Following the resolution:

• The majority of the demand, amounting to ₹35.90 crore, has been dropped.
• A liability of ₹3.35 crore, plus applicable interest and penalties, has been confirmed.

Specific Demand Details

The confirmed ₹3.35 crore demand relates to CENVAT credit on sales commission paid to foreign entities, which was treated as business auxiliary services.

Company's Response

Zydus Lifesciences has stated its intention to challenge the order by filing an appeal. The company maintains that there is no material financial impact on its operations from this remaining liability.

Market Response

Following this announcement, shares of Zydus Lifesciences closed at ₹1,018.90, down 1.57%.

Implications

The withdrawal of the larger tax demand is a positive development for Zydus Lifesciences, reducing uncertainty and potentially freeing up resources that might have been set aside for tax liabilities. However, the company still faces a smaller, yet significant, tax liability of ₹3.35 crore plus interest and penalty. The company's decision to appeal this remaining demand suggests confidence in its position, but the outcome of this appeal process remains to be seen.

Zydus Life Science , a prominent player in the pharmaceutical industry, has received a significant boost for its oncology injectable manufacturing facility located in SEZ1, Ahmedabad. The U.S. Food and Drug Administration (USFDA) has issued an Establishment Inspection Report (EIR) with an improved classification for the facility, marking a positive development for the company.

Improved FDA Classification

The USFDA has classified the Ahmedabad facility as Voluntary Action Indicated (VAI) following a Good Manufacturing Practice (GMP) follow-up inspection conducted from June 9-18, 2025. This classification represents a notable improvement from the previous Official Action Indicated (OAI) status received in June 2024.

Significance of the Classification Change

The shift from OAI to VAI status is a crucial development for Zydus Lifesciences:

• VAI Classification: Indicates that although objectionable conditions were found during the inspection, the issues do not justify further regulatory action. The FDA believes that the company can address these issues through voluntary action.
• OAI Classification: Previously, this more serious classification suggested that regulatory and/or administrative actions were recommended following significant objectionable conditions or practices.

Implications for Zydus Lifesciences

This improved classification could have several positive implications for Zydus:

1. Enhanced Regulatory Compliance: Demonstrates the company's commitment to addressing and resolving regulatory concerns.
2. Potential for Increased Production: May allow for smoother operations and potentially increased production at the oncology injectable facility.
3. Market Confidence: Could boost investor and stakeholder confidence in the company's quality control and regulatory compliance measures.

Official Disclosure

In compliance with regulatory requirements, Zydus Lifesciences has officially disclosed this development to the stock exchanges. The company stated in its press release dated September 21, 2025:

"We wish to inform that the company has received the Establishment Inspection Report (EIR) from the USFDA for a GMP follow-up inspection conducted at its oncology injectable facility located at SEZ1, Ahmedabad from 9th to 18th June 2025. The EIR has classified the facility as Voluntary Action Indicated (VAI)."

This announcement underscores the importance of the classification change and its potential impact on the company's operations and market standing.

The improved FDA classification for Zydus Lifesciences' Ahmedabad oncology facility marks a positive turn for the company, potentially paving the way for enhanced operational capabilities and regulatory standing in the pharmaceutical industry.