Karnataka GST Department Withdraws Notice Against Infosys Amid Tax Evasion Probe
Infosys stated that GST payments are eligible for credit or refund against the export of IT services.
Infosys Ltd. said on Thursday that Karnataka's Goods and Services Tax Department withdrew the pre-show cause notice issued to the Bengaluru-based software services provider.
The company was asked to submit further responses to the Directorate General of GST Intelligence's central authority on the matter, it said in a statement to the exchanges, but did not provide additional details.
On Wednesday, Infosys reported it was being investigated for alleged evasion of Integrated Goods and Service Tax amounting to Rs 32,403 crore.
Infosys has established overseas branches outside India, which are considered distinct entities under the IGST Act 2017. The Directorate General of GST Intelligence said that Infosys included expenses incurred by these branches in their export invoices from India and, based on these export values, calculated the eligible refund.
In response to the allegations, Infosys said, “The company believes that, as per regulations, GST is not applicable on these expenses. 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 entities are not subject to GST.”
Infosys asserted it has paid all its GST dues and fully complies with central and state regulations. It added that GST payments are eligible for credit or refund against the export of IT services.
Infosys shares fell for the second consecutive trading session on Thursday, closing 0.8% lower at Rs 1,852.60. This compares to a 0.2% gain in the country's benchmark NSE Nifty 50.
