Updated 06:47 IST, August 2nd 2024
Karnataka authorities withdraw GST notice against Infosys
Infosys was earlier served a Rs 32,403 crore GST notice for services availed from its overseas branches over a five-year period beginning 2017.

GST notice withdrawn: A day after receiving a GST demand notice amounting to Rs 32,403 crore, Infosys informed that authorities in the Karanataka state government have withdrawn the 'pre-show cause' notice and have directed the company to provide further response to the Directorate General of GST Intelligence (DGGI).
The controversy erupted on Wednesday when India's second-largest IT company was served a Rs 32,403 crore GST notice for services availed from its overseas branches over a five-year period beginning 2017. Infosys had called the notice as a 'pre-show cause' notice and stated that GST is not applicable to the expenses mentioned.
In a regulatory filing, Infosys said: “The company has received a communication from Karnataka State authorities, withdrawing the pre-show cause notice and directing the company to submit further response to the Directorate General of GST Intelligence (DGGI) central authority on this matter.”
The notice, issued by the DGGI on Tuesday, July 30, was for the non-payment of Integrated Goods and Services Tax (IGST) on import services as the recipient of services. According to the DGGI, Infosys is liable to pay IGST under the reverse charge mechanism on supplies received from its branches located outside India, amounting to Rs 32,403.46 crore for the period from July 2017 to 2021-22.
Nasscom sought clarity
This action by the DGGI has been criticised by industry and tax experts. The tech industry body Nasscom has sought clarification from the Union finance ministry regarding the Rs 32,000 crore GST demand notice served to Infosys, alleging that it reflects a lack of understanding of the industry's operating model.
In a statement issued on Thursday, Nasscom supported Infosys, saying, “This reflects a lack of understanding of the industry’s operating model. This is an industry-wide issue, and multiple companies are facing avoidable litigation, uncertainty, and concerns from investors and customers.”
Nasscom stated that the issue involves the applicability of GST through the reverse charge mechanism (RCM). The GST enforcement authorities have been issuing notices for remittance by Indian head offices to their foreign branches in cases where there is no service between the head office and the foreign branch, ignoring that this is not a case of ‘import of service’ by the head office from the branch.
(With PTI inputs)
Published 06:47 IST, August 2nd 2024