Infosys Issued Notice for Alleged Rs 32,403 Cr GST Evasion

Infosys, India's second-largest IT services firm, faces a pre-show cause notice for alleged GST evasion amounting to approximately Rs 32,403 crore. The Karnataka State GST authorities issued the notice for the period from July 2017 to March 2022, concerning expenses incurred by Infosys' overseas branch offices.

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The company has also received a similar pre-show cause notice from the Director General of GST Intelligence. Infosys is currently in the process of responding to this notice as well. The company maintains that GST is not applicable to these expenses according to existing regulations.

GST Applicability on Overseas Branch Services

According to Infosys, a recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on the recommendations of the GST Council clarifies that services provided by overseas branches to the Indian entity are not subject to GST. The company argues that these payments are eligible for credit or refund against the export of IT services.

Infosys has stated that it has paid all its GST dues and remains fully compliant with both central and state regulations regarding this matter. The company believes that its interpretation of the regulations is correct and that no GST is due on the expenses in question.

In its BSE filing, Infosys reiterated its stance, asserting that it has adhered to all regulatory requirements. The company is confident that it will be able to resolve the issue with the authorities based on the existing guidelines and circulars.

The notices have prompted Infosys to review its compliance measures and ensure all documentation is in order. The company is working closely with legal and tax experts to address the concerns raised by the GST authorities.

This development highlights the ongoing scrutiny faced by large corporations regarding tax compliance. It underscores the importance of staying updated with regulatory changes and ensuring thorough documentation of all transactions.

Infosys' proactive approach in responding to these notices reflects its commitment to maintaining transparency and compliance in its operations. The outcome of this case could set a precedent for other companies facing similar issues with GST applicability on overseas branch expenses.

The company continues to engage with relevant authorities to clarify its position and resolve any misunderstandings related to GST payments. Infosys remains optimistic about a favourable resolution based on current regulations and guidelines.