IT services company Infosys has received a tax demand of about $4 billion from India’s tax authority, Reuters news report said.
The demand relates to services received by Infosys from its overseas branches in various foreign countries and import of services is liable to tax.
Infosys said in a statement it received the notice from Director General of Goods and Services Tax Intelligence on Wednesday and was in the process of responding to it, adding that it believed tax is not applicable on the dealings.
Infosys has paid all its tax dues and is in compliance with the central and state regulations on this matter, A.G.S. Manikantha, Company Secretary of Infosys, said in a communication to stock exchanges in India.
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.
Infosys believes 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.
The tax notice stated the demand is from July 2017 until the 2021-22 year. Further investigation is under progress, the notice said.
