IT services company Infosys has been issued a pre-show cause notice for alleged goods and services tax (GST) evasion up to Rs 32,403 crore.
In a BSE filing, the Bengaluru headquartered IT firm said the Karnataka GST authorities have issued a pre-show cause notice for payment of GST of Rs 32,403 crore for the period July 2017 to March 2022, towards expenses incurred by overseas branch offices of Infosys Ltd, and added that the company has responded to the pre-show cause notice.
“… 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,” the filing said.
The company believes that as per regulations, GST is not applicable on such expenses, it said.
“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 the Indian entity are not subject to GST,” Infosys said.
Infosys said GST payments are eligible for credit or refund against 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 said.
Sources said the Infosys offices outside India would be treated as distinct entities from the company as per the Integrated Goods and Services Tax (IGST) Act. All services given by the branch offices would be treated as import of services and so attract GST, the sources said.