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Published 10:20 IST, August 1st 2024

Infosys shares dip on Rs 32,000 crore tax evasion demand notice

Infosys stated in an exchange filing that it has fulfilled all tax obligations and asserted that GST is not applicable to the expenses as claimed by DGGI.

Reported by: Business Desk
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Infosys CEO Salil Parekh
Infosys CEO Salil Parekh | Image: PTI

Infosys shares: Shares of Infosys, India's second-largest IT services provider, fell by up to 1.21 per cent to an intraday low of Rs 1,845.40 after the company received a tax evasion demand notice exceeding Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI). According to reports, the notice pertains to unpaid Integrated Goods and Services Tax (IGST) under the Reverse Charge Mechanism (RCM) for supplies received from the company's overseas branches.

The demand covers the period from July 2017 to 2021-22, with the Karnataka State GST authorities issuing a pre-show cause notice for the payment of Rs 32,403.46 crore. Under RCM, the recipient of goods or services is liable to pay the tax instead of the supplier. The notice claims Infosys included expenses from its overseas branches in its export invoices from India and calculated the eligible refund based on these export values.

In response, Infosys stated in an exchange filing that it has fulfilled all tax obligations and asserted that GST is not applicable to the expenses as claimed by DGGI. The company referred to a recent circular issued by the Central Board of Indirect Taxes and Customs, clarifying that services provided by overseas branches to Indian entities are not subject to GST.

As of 10:13 am, Infosys shares traded 0.36 per cent lower at Rs 1,861.25, underperforming the Sensex, which was up by 0.23 per cent.
 

Updated 10:20 IST, August 1st 2024