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Taxman lays claims for ₹32,403 cr GST dues from Infosys; Co says fully compliant

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A pre show cause notice has been issued by both the Karnataka State GST authority as well as Directorate General of GST Intelligence (DGGI).
Taxman lays claims for ₹32,403 cr GST dues from Infosys; Co says fully compliant
Infosys says that it believes that as per regulations and interpretation GST is not applicable to the expenses it incurred in the overseas branches. Credits: Fortune India

Bengaluru-headquartered IT major Infosys Ltd says it has received a communication from the tax authorities for payments of a large sum under the Goods and Services Tax (GST) laws.

India's second-largest software services exporter has received a pre-show cause notice for the payment of a sum of ₹32,403 crore. The payment pertains to a period of five years starting from July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys. The company has received one such notice from the Karnataka State GST authorities to which it has already responded.

"The company has also received a pre-show cause notice from the Director General of GST Intelligence on the same matter and the company is in the process of responding to the same," Infosys says in its statement.

Infosys says that it believes that as per regulations and interpretation GST is not applicable to the expenses it incurred in the overseas branches. "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 entities are not subject to GST," the statement says.

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Following representation from trade bodies and industry on tax demands being raised in many instances using wide interpretation of GST, the GST Policy Wing, Central Board of Indirect Taxes and Customs had come out with a clarification circular on valuation of supply of import of services by a related person where recipient is eligible to full input tax credit.

"Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter," the company further says, adding that the GST payments are eligible for credit or refund against export of IT services.

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