In a huge development that has hit Infosys, which is one of the top IT companies in India, the taxman has sent a GST notice that alleges tax evasion. The GST notice is worth a massive Rs 32,403 crore. Reacting to the income tax notice in a stock exchange filing, Infosys referred to it as a ‘pre-show cause’ notice. Not just that, it even contested the claim and indicated that it was not willing to accept it. The GST notice had been slapped on expenses and Infosys said, in its reaction, that it does not believe the GST is applicable on the ones mentioned by authorities. In effect, the Bengaluru-headquartered Infosys has pointed out that it may well be contesting the claim. The stunning amount will rival a year’s profit for the company.
The GST notice on Infosys is for services availed by the company from its overseas branches. The Karnataka State GST authorities have issued a pre-show cause notice that goes as far back as five years, all the way back to between July 2017 and March 2022.
In its stock exchange filing, Infosys said, “…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 added, “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”.
That it is not going to be paying anything was highlighted by the company when it said, “Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter”.
Infosys share price closed at Rs 1,869 yesterday, down by 0.43%.
Read the full reaction by Infosys to the massive GST demand below:
TO ALL STOCK EXCHANGES
BSE LIMITED
NATIONAL STOCK EXCHANGE OF INDIA LIMITED
NEW YORK STOCK EXCHANGE
July 31, 2024
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 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
Infosys has received a GST notice from the Karnataka State GST authorities for non-payment of GST of Rs. 32,403 crores for the period July 2017 to March 2022. Infosys has rejected all claims about tax evasion. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
