Infosys Faces ₹32,403 Crore GST Demand Notice, Assures Compliance
3 Sources
3 Sources
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Infosys terms Rs 32,000 GST refund notice 'pre-show cause': Read company's letter to BSE - Times of India
GST authorities have slapped a Rs 32,403 crore notice on Indian IT giant Infosys for services availed by the company from its overseas branches for five years starting 2017. According to reports, the notice sent to Infosys by GST authorities says: "In lieu of receipt of supplies from overseas branch offices, the Company has paid consideration to the branch offices in the form of overseas branch expenses.Hence, M/s Infosys Ltd, Bengaluru is liable to pay IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of Rs 32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22.". It alleges that Infosys set up branch offices outside India and included the expenses it incurred towards these as part of its export invoice. The Rs 32,403 crore GST demand is more than the company's this year's profit. For the June quarter, Infosys' net profit rose 7.1 per cent year-on-year to Rs 6,368 crore, and revenue from operations stood at Rs 39,315 crore, an increase of 3.6 percent from a year ago. In a stock exchange filing, Infosys called the notice a 'pre-show cause' notice and said it believes the GST is not applicable on these expenses. Dear Sir/Madam, Sub: Company Statement This is with respect to news articles published earlier today on non- payment of GST in relation to expenses incurred by the overseas branches of the Company. The Company would like to clarify on this matter: 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 the Director General of GST Intelligence on the same matter and the Company is in the process of responding to the same. 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 is also important to note that the GST payments are eligible for credit or refund against 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. This is for your information and record. Yours sincerely, For Infosys Limited A.G.S. Manikantha Company Secretary ACS- 21918 The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.
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Tax woes: Infosys slapped with ₹32,403 crore GST demand notice
GST authorities have slapped a ₹32,403 crore notice on Infosys for services availed by the company from its overseas branches for five years starting 2017. Infosys, in a stock exchange filing, called the notice a 'pre-show cause' notice and said it believes the GST is not applicable on these expenses. The Bengaluru-headquartered IT firm said Karnataka State GST authorities have issued a pre-show cause notice for payment of GST of ₹32,403 crores for the period July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys Limited, and added that the company has responded to the pre-show cause notice. Also Read: Sikkim's unique tax exemption: Why residents don't have to pay Income Tax "...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," the filing said. The company believes that as per regulations, GST is not applicable on such expenses. "Additionally, as per a recent Circular...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," Infosys said. Also Read: Byju's settles dispute with BCCI, will pay ₹158 crore dues by August 9 Infosys argued that GST payments are eligible for credit or refund against 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 contended. As per reports, the document sent to Infosys by GST authorities says: "In lieu of receipt of supplies from overseas branch offices, the Company has paid consideration to the branch offices in the form of overseas branch expense. Hence, M/s Infosys Ltd, Bengaluru is liable to pay IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of ₹32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22." Also Read: Here's how much Big Tech giants like Google, Microsoft, and Amazon spent on AI The Directorate General of GST Intelligence in Bengaluru believes Infosys did not pay the Integrated-GST (IGST) on the import of services as a recipient of services. It alleges that Infosys set up branch offices outside India and included the expenses it incurred towards these as part of its export invoice. The demand - at a staggering ₹32,403 crore - is more than a year's profit for Infosys. For the June quarter, Infosys' net profit rose 7.1 per cent year-on-year to ₹6,368 crore, and revenue from operations stood at ₹39,315 crore, an increase of 3.6 per cent from a year ago. The GST demand is also bound to evoke interest as Infosys manages the Goods and Services Tax Network (GSTN) portal. In 2015, Infosys had bagged ₹1,380 crore contract to build the technology platform for Goods and Services Tax (GST).
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Infosys assures exchanges of GST compliance - Times of India
IT giant Infosys has clarified to stock exchanges that it has fully complied with all Goods and Services Tax (GST) regulations. The company has assured investors that it has paid all its GST dues and is in adherence with both central and state government guidelines on the matter. The demand in question pertains to expenses incurred by Infosys' overseas brand offices during the period from July 2017 to March 2022. According to the company, GST is not applicable to these expenses.Additionally, a recent circular issued by the Central Board of Indirect Taxes and Customs clarified that services provided by overseas branches to the Indian entity are exempt from GST. Infosys has asserted that GST payments made by the company are eligible for credit or refund against its IT service exports. The IT giant has also responded to pre-show cause notices issued by both Karnataka State GST authorities and the Director General of GST Intelligence, reaffirming its compliance with all GST regulations. For those unaware, Infosys was accused of evading Goods and Services Tax (GST) of Rs 32,000 crore, according to an internal document seen by The Economics Times. The Directorate General of GST Intelligence has reportedly issued a notice to the company for alleged tax evasion related to transactions with its overseas branch offices between July 2017 and 2022. The IT giant is accused of failing to pay Integrated Goods and Services Tax (IGST) under the Reverse Charge Mechanism on services received from its foreign branches. The total amount in question is Rs 32,403.46 crore, as reported by ET. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.
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Infosys, a leading Indian IT company, has received a GST demand notice of ₹32,403 crore. The company maintains its compliance with GST regulations and is working with authorities to address the issue.
Infosys Receives Substantial GST Demand Notice
Infosys, one of India's largest IT services companies, has been served with a Goods and Services Tax (GST) demand notice amounting to ₹32,403 crore (approximately $3.9 billion) by tax authorities
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. This development has sent ripples through the Indian corporate sector, raising questions about tax compliance and interpretation of GST regulations.Nature of the Demand Notice
The notice issued to Infosys is termed as a "pre-show cause notice" related to a GST refund
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. It pertains to the period from July 2017 to March 2022, covering the initial years of GST implementation in India. The substantial amount involved has drawn significant attention from investors, analysts, and the broader business community.Infosys' Response and Assurances
In response to the notice, Infosys has taken a proactive stance. The company has assured stock exchanges of its compliance with GST regulations
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. In a letter to the Bombay Stock Exchange (BSE), Infosys stated that it has received a "pre-show cause notice" from the Directorate General of GST Intelligence (DGGI)1
.The company emphasized that this notice is a routine procedural step in any refund process. Infosys maintains that it has been fully compliant with GST regulations and has not received any formal demand notice
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Potential Impact and Next Steps
While the notice has raised concerns, it's important to note that it is not a final demand. Infosys has stated that it is actively engaging with the tax authorities to address any questions or clarifications they may require
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.The company's shares experienced some volatility following the news, reflecting investor concerns. However, Infosys' prompt communication and assurances have helped to mitigate some of the immediate market reactions.
Broader Implications for the IT Sector
This development has broader implications for the Indian IT sector, which has been a significant contributor to the country's economic growth. It highlights the complex nature of GST compliance, especially for large corporations with diverse operations.
The case also underscores the importance of clear communication between businesses and tax authorities, particularly in interpreting and applying relatively new tax regimes like the GST.
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