The Directorate General of GST Intelligence (DGGI) is currently investigating Infosys Ltd for an alleged GST evasion exceeding Rs 32,000 crore. In response to these allegations, Infosys issued a clarification through an official filing, addressing the concerns raised by the authorities.
Infosys shares took a slight dip, falling 1% to a low of Rs 1,845.40 on the Bombay Stock Exchange (BSE) on Thursday, following allegations of GST evasion involving the tech giant. By 12:00 pm.
The Directorate General of GST Intelligence (DGGI) is investigating Infosys for allegedly evading over Rs 32,000 crore in GST payments. In response to this, Infosys issued an official filing clarifying the situation. The company stated, "Karnataka State GST authorities have issued a pre-show cause notice for payment of GST amounting to Rs 32,403 crores for the period from July 2017 to March 2022. This pertains to expenses incurred by overseas branch offices of Infosys Limited."
Infosys further explained, “We have responded to this pre-show cause notice. Following the news articles, we have also received a pre-show cause notice from the Director General of GST Intelligence on the same issue, and we are in the process of responding.”
The company has contested the GST demand, referencing a recent circular from the Central Board of Indirect Taxes and Customs, which aligns with GST Council recommendations. According to Infosys, GST is not applicable to services provided by its overseas branches to Indian entities. The company emphasized, "It is also important to note that the GST payments are eligible for credit or refund against the export of IT services."
Infosys assured investors and stakeholders that it has paid all GST dues and remains in full compliance with both central and state regulations.
Infosys Faces Allegations of GST Evasion: A Closer Look
In a recent development, Infosys Ltd, one of India's leading IT services giants, has come under scrutiny by the Directorate General of GST Intelligence (DGGI) for an alleged evasion of integrated Goods and Service Tax (IGST) amounting to over Rs 32,000 crore. This alleged evasion reportedly spans the period from July 2017 to March 2022, involving non-payment of IGST on imported services.
According to sources within the Union government, Infosys is accused of not paying IGST on services imported from its overseas branches. An official explained, "The company has imported services from its overseas branches, but has not paid IGST on the same."
In response to these allegations, Infosys issued a statement to the stock exchanges on Wednesday. The Bengaluru-headquartered tech giant stated that, according to existing regulations, GST is not applicable to these expenses. Infosys acknowledged receiving a pre-show cause notice from the DGGI, which demanded GST payment of Rs 32,403 crore for the specified period. The company has since responded to the notice.
The statement from Infosys reads: "Karnataka State GST authorities have issued a pre-show cause notice for payment of GST of Rs 32,403 crore 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."
Infosys further asserted that, based on a circular dated 26 June 2024, issued by the Central Board of Indirect Taxes and Customs (CBIC) following recommendations from the GST Council, services provided by overseas branches to the Indian entity are not liable to GST. The company emphasized that GST payments are eligible for credit or refund against the export of IT services, and reiterated its compliance with all central and state regulations concerning GST.
It's worth noting that Infosys is responsible for maintaining the GST Network (GSTN), which is the technology backbone of India's GST system.
This is not the first time Infosys has faced issues with the indirect tax department this financial year. In April, the Odisha GST Authority imposed a penalty of Rs 1.46 lakh on the company for availing ineligible input tax credit for the financial year 2018-19.
The ongoing investigation and the company's response will likely be closely watched, as they could have significant implications for both Infosys and the broader IT services sector in India.
Inputs by Agencies
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