No relief for Infosys? Government unlikely to relax $4 billion GST demand: Report

Infosys GST notice update: The Indian government has no plans to ease the Rs 32,000 crore ($4 billion) tax demand it issued to Infosys, a government source revealed to Reuters. The tax demand, which aligns with the country’s good and services tax regulations, was sent to the IT services company, which ranks as the second-largest in India.
After a meeting with tax officials, Infosys has requested a period of ten days to prepare and submit its response to the tax demand, according to the source.
The Directorate General of GST Intelligence (DGGI) is investigating Infosys for allegedly evading more than Rs 32,400 crore in GST payments between July 2017 and March 2022, according to a TOI eport last week. The company is accused of failing to pay Integrated GST on services imported from its overseas branches.
Based on an incident report by DGGI’s Bangalore zonal unit, Infosys was required to pay GST under the reverse charge mechanism (RCM), which mandates the service recipient to pay the tax. Integrated GST applies to imports and inter-state transactions of goods and services.
Infosys has disputed the allegations, stating, “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 entity are not subject to GST. It is also important to note that the 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 also confirmed receiving “pre-show cause notices” from authorities in Karnataka and DGGI.