Infosys says it's in full compliance after Rs 32,000 crore GST notice

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Bengaluru-based IT services company Infosys said that it has received a pre-show cause notice from Karnataka State Goods and Services Tax (GST) authorities for the payment of GST amounting to Rs 32,403 crore.

The company, in a regulatory filing, said that the demand was towards the expenses incurred by its overseas brand offices for the period from July 2017 to March 2022.

“Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter,” it said.

“The company has responded to the pre-show cause notice. Subsequent to the publication of the news articles, the company 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,” said the company in the statement.

Infosys said 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 the Indian entity are not subject to GST,” said the company.

The company in the filing also added that it is also important to note that the GST payments are eligible for credit or refund against the export of IT services.

According to media reports, the DGGI has stated that as the company creates overseas branches to service clients as part of its agreement with the clients, these branches and the company are distinct persons under the IGST Act.