Infosys Faces Massive GST Demand: Karnataka Withdraws Pre-Show Cause Notice

Karnataka authorities have retracted the pre-show cause notice served to Infosys and directed the IT giant to submit a fresh response to the DGGI central authority, concerning a Rs 32,400 crore GST demand. Infosys maintains that GST is not applicable on the expenses cited in the notice.

Karnataka authorities have withdrawn the pre-show cause notice served to Infosys, requesting the IT giant to submit a fresh response to the Directorate General of GST Intelligence (DGGI). This move comes in light of a substantial Rs 32,400 crore GST demand, covering services availed by Infosys from its overseas branches over a five-year period starting in 2017.

The DGGI, tasked with ensuring compliance with Indirect Tax laws, had alerted Infosys regarding the notice, prompting the company to assert that GST does not apply to the cited expenses. Infosys noted a directive in a recent circular clarifying that services provided by overseas branches to an Indian entity are not subject to GST.

Narinder Wadhwa, CEO of SKI Capital and co-chair of a PHDCCI committee, emphasized the need for thorough investigations and evidence in cases against companies with significant global exposure, like Infosys, to protect market stability and investor confidence. Infosys continues to affirm full compliance with central and state GST regulations.

(With inputs from agencies.)