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Shares of Information Technology (IT) and IT-enabled services (ITeS) companies such as Infosys, TCS, and Mindtree were trading mixed on Thursday following news reports that the tax department has demanded from them the service tax worth nearly Rs 10,000 crore. Although the Nifty IT (up 1%) index was the leading sectoral gainer in the noon trade, most of the gains came from Infosys (up 2%), KPII (up 3%) and Tech Mahindra (up 2%).
Mindtree, Wipro and Oracle Financial Services Software lost up to 1% on the National Stock Exchange (NSE).An Economic Times report claimed that the service tax department has sent notices to about 200 companies so far, asking them to return export benefits claimed in the last five years (2012-2016) on software provided to clients outside India. The report also said that the tax department has additionally sought 15% service tax along with fines. The report did not mention names of individual companies. Industry experts believe this will be a serious blow to the IT sector, which is already grappling with tighter US immigration laws and increasing automation.