Key Takeaways
- Infosys denies evading payment of GST and asserts compliance with all tax regulations.
- The company believes that GST is not applicable to certain expenses, as per a recent CBDT circular.
- Infosys is responding to pre-show cause notices from tax authorities and has received a notice from the Director General of GST Intelligence.
New Delhi: IT firm Infosys has strongly denied evasion of any payment of GST and said the company has paid all its GST dues and is “fully in compliance” with the central and state regulations on this matter.
In a regulatory filing with the stock exchanges, Infosys said it is important to note that the GST payments are eligible for credit or refund against the export of IT services and not on expenses incurred by overseas branch offices of Infosys Limited.
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.
Infosys is a listed company, and its shares were trading marginally lower by 0.56 percent on the Nifty this morning.
Quoting a recent circular by the government, the company said, “According to Infosys, GST is not applicable to certain expenses, as per a recent CBDT circular. This circular states that services provided by overseas branches to Indian entities are exempt from GST.”
The company has responded to the pre-show cause notice, it said, adding that subsequent to the publication of news articles on this subject, it 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, Infosys’s communication to the bourses said.
According to the notice issued by the Director General of GST Intelligence (DGGI) of the Bangalore Unit, Infosys was supposed to pay GST under the Reserve Charge Mechanism, which requires the service recipient to pay the levy.
Most IT firms have set up branches overseas, where the company undertakes projects as required by local laws.
