Infosys, India’s second-largest IT services firm, has received a closure in the goods and services tax (GST) demand notice for over Rs 30,000 crore.
Infosys said it had received communication from the Directorate General of GST Intelligence (DGGI) ‘closing’ the pre-show cause notice proceedings for the financial years 2018–19 to 2021–22.
“With the receipt of today’s communication from DGGI, this matter stands closed, the Bengaluru IT major said in a regulatory filing late evening on Friday.
The closure report comes after the Karnataka State GST authorities in July last year had sent a Rs. 32,403 crore notice for non-payment of GST under the reverse-charge mechanism for services imported from its foreign branches during the period spanning July 2017 to March 2022.
This amounted to 85% of its revenue for the quarter ended June 30 in FY25.
In July and August 2024, Infosys said it had received and responded to the notice issued by DGGI.
After the notice, the NR Narayana Murthy-founded company had said it paid all its dues and is in compliance with central and state regulations.
In a separate regulatory filing on Friday to the NSE, the company said: “It may be noted that the Company had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022 on the issue of non-payment of IGST under Reverse Charge Mechanism.”
“The Company had on 3 August 2024 received a communication from DGGI closing the pre-show cause notice proceedings for the financial year 2017–18,” the company further said in the Friday filing.
In the notice last year, the DGGI had stated that as the company creates overseas branches to service clients as part of its agreement with the clients, those branches and the company are each treated as ‘distinct persons’ under the IGST Act.
“Thus, 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 GST under the reverse charge mechanism on supplies received from branches located outside India,” said the notice sent last year.
Source #ET
