DBT Bureau
Bengaluru, 31 July 2024
India’s second-largest IT services company Infosys has received tax demand of over Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI) over alleged non-payment of taxes. The alleged evasion of taxes has arisen in lieu of expenses incurred by overseas branch offices of Infosys Limited.
In a late evening filing, Infosys said that it has received demand notices from Karnataka State GST authorities and Director General of GST Intelligence over the matter. However, the company said that such tax demand is not applicable on these expenses and it is compliant with all the existent rules of the state and central government.
“Karnataka State GST authorities have issued a pre-show cause notice for payment of GST of Rs. 32,403 crores for the period July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys Limited. The company has responded to the pre-show cause notice. Subsequent to the publication of the news articles, the company has also received a pre-show cause notice from Director General of GST Intelligence on the same matter and the Company is in the process of responding to the same,” Infosys said in an exchange filing on Wednesday.
“The company believes that as per regulations, GST is not applicable on these expenses. Additionally, as per a recent Circular (circular number 210/4/2024 dated June 26, 2024) issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, services provided by the overseas branches to Indian entity are not subject to GST,” it added.
The company also noted that the GST payments are eligible for credit or refund against the export of IT services. “Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter,” the company said.
Interestingly, Infosys manages the GST (Goods and Services Tax) portal of the union government.
Recently, Infosys’ Founder NR Narayana Murthy opined that India’s dream of being a manufacturing hub is audacious given China has already emerged as the manufacturing hub of the world. “”China has already become the factory of the world. Around 90% of things in supermarkets and home depots in other countries are manufactured in China. They have six times the GDP of India. It is too audacious of us to say India will become the manufacturing hub,” Murthy has said. Infosys’ ADR is trading 2.79% down at $21.98 in NYSE on Wednesday.
