Infosys receives pre-show cause notice for an alleged Goods and Service Tax (GST) evasion of nearly ₹32,400 crore. The IT company is currently under investigation by the Directorate General of GST Intelligence (DGGI).

According to reports, the alleged evasion concerns the period from July 2017 to March 2022 and relates to the non-payment of IGST on imported services. An official stated, "The company has imported services from its overseas branches, but has not paid IGST on the same."

Infosys receives pre-show cause notice
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However, the IT firm stated in the BSE (Bombay Stock Exchange) filing, that the Karnataka GST authorities have issued a pre-show cause notice for payment of GST of ₹ 32,403 crore between the period of July 2017 to March 2022, for expenses accumulated by overseas branch offices of Infosys Ltd. NDTV reported.

The filing read, "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." It further mentioned that, as per regulations, GST does not apply to such expenses. The company believes that they are not exploiting anything.

Infosys referred to 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 the Indian entity are not subject to GST."

Infosys further acclaimed that GST payments are eligible for credit or refund against the export of IT services. "Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter," the company asserted.

Sources indicate that, under the Integrated Goods and Services Tax (IGST) Act, Infosys’s foreign offices are treated as distinct entities from the main company. Therefore, services provided by these branch offices are classified as imports of services and are liable for GST.

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