Infosys Responds to Scrutiny: Key Takeaways from Official Statement

In light of recent media reports concerning the alleged non-payment of Goods and Services Tax (GST) by Infosys Limited for expenses related to its overseas branches, the company has issued a detailed statement to clarify the situation.

Background on the GST Allegations

The Karnataka State GST authorities have issued a pre-show cause notice to Infosys, claiming an outstanding GST liability of Rs. 32,403 crores. This claim covers the period from July 2017 to March 2022 and pertains to expenses incurred by the company's overseas branch offices. Following these reports, the Director General of GST Intelligence also issued a similar notice.

Company's Response to the Allegations

Infosys has responded to the pre-show cause notice and is in the process of addressing the subsequent notice from the Director General of GST Intelligence. The company asserts that, according to current tax regulations, the GST is not applicable to these particular expenses. Infosys points to Circular No. 210/4/2024, issued on June 26, 2024, by the Central Board of Indirect Taxes and Customs (CBIC). This circular, based on GST Council recommendations, clarifies that services provided by overseas branches to the Indian entity are exempt from GST.

Key Takeaways

GST Applicability: Infosys asserts that the GST does not apply to expenses incurred by overseas branches, as per current regulations and a recent CBIC circular.

Compliance Status: The company emphasizes that it has paid all due GST and is fully compliant with both central and state regulations.

Eligible Credits and Refunds: Infosys notes that any GST payments made are eligible for credit or refund against the export of IT services, ensuring no undue financial burden.

Next Steps

Infosys is in ongoing communication with the relevant authorities to resolve the matter. The company reassures its stakeholders that it continues to operate in full compliance with all applicable laws and regulations.

Conclusion

Infosys remains committed to maintaining transparency and adherence to all regulatory requirements. The company is actively engaging with the authorities to clarify and resolve the GST issue, and it is confident that the matter will be addressed in accordance with the law. Stakeholders and investors are assured of the company's continued dedication to regulatory compliance and ethical business practices.

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