infosys gst notice: Infosys accused of Rs 32,000-crore GST evasion: Here are 10 things to know

Indian IT giant Infosys has received multiple notices over alleged tax evasion of about Rs 32,403 crore from Goods and Services Tax (GST) authorities, the company said in a stock exchange filing on July 31.

Shares of Infosys fell 1% to the day’s low of Rs 1,845.40 on the BSE on Thursday, before closing at 1,848.

Here are 10 things to know about Infosys’ tax woes:

1. Infosys has received a pre-show cause notice from Karnataka state GST authorities for a payment of Rs 32,403 crore for the period July 2017 to March 2022 towards expenses incurred by its overseas branch offices.
2. It has also received a pre-show cause notice from the Director General of GST Intelligence on the matter and is in the process of responding to the same.
3. The GST demand pertains to services received by Infosys from its overseas branches in various foreign countries. These so-called ‘import of services’ are liable to tax.
4. “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 IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of Rs 32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22,” reads the notice issued to Infosys.
5. Infosys said that as per regulations, GST is not applicable on these expenses. It has paid all its tax “dues and is fully in compliance with the central and state regulations on this matter,” the company added.
6. “Additionally, as per a recent circular…issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, services provided by the overseas branches to Indian entity are not subject to GST,” Infosys said.
7. At a staggering Rs 32,403 crore, the GST demand is more than a year’s profit for Infosys. For the June quarter, its net profit rose 7.1% year on year to Rs 6,368 crore, and revenue from operations stood at Rs 39,315 crore, up 3.6% from a year ago.
8. Shares of Infosys have jumped nearly 20% year to date, and by 36% in the last year.
9. This is not the first time that the IT major has been under the scanner of the GST Department. In April, Odisha GST Authority had imposed a penalty of Rs 1.46 lakh for availing ineligible input tax credit.
10. The GST demand is also bound to evoke interest as Infosys manages the Goods and Services Tax Network (GSTN) portal.