Infosys faces Rs 32,000 crore tax evasion demand notice from authorities

Tax evasion notice: Infosys has received a tax evasion demand exceeding Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI), according to media reports. In an exchange filing, the IT major has also accepted receiving the pre-show cause notice for payment of GST of Rs 32,403 from Karnataka State GST authorities.

The document reportedly states, "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 Rs 32,403.46 crore for the period 2017-18 (July 2017 onwards) to 2021-22."

Under the Reverse Charge Mechanism (RCM) in Goods and Services Tax (GST), the recipient of goods or services is responsible for paying the tax instead of the supplier.

The document further mentions that Infosys included expenses incurred by its overseas branches as part of their export invoice from India. Based on these export values, the company calculated the eligible refund. "The receipt of export proceeds and export invoice related to the project was being raised by the Company," it reads.

Infosys, in an exchange filing, asserted that it has paid all dues and that GST is not applicable to the expenses claimed by DGGI.

“Infosys 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 entities are not subject to GST,” Infosys said in the BSE filing.