The Infosys Saga – Finally Out of GST Trap

[ABS News Service/11.06.2025]

After a year-long rollercoaster of paperwork battles and legal manoeuvring, DGGI has officially freed Infosys from a Rs.32,403 crore GST liability - twist of a financial thriller.

GST authorities have slapped a Rs.32,403 crore notice on Infosys for services availed by the company from its overseas branches for five years starting in 2017.

The Bengaluru-headquartered IT firm said Karnataka State 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 the expenses incurred by overseas branch offices of Infosys Limited and added that the company has responded to the pre-show cause notice.

The GST demand is also bound to evoke interest as Infosys manages the Goods and Services Tax Network (GSTN) portal.

August 01, 2024: NASSCOM defends Infosys, says Rs.32,000-cr. GST notice shows lack of understanding of industry model.

NASSCOM on Thursday defended Infosys, which is facing a Rs.32,000-crore GST notice, saying the move reflected a lack of understanding of the industry's operating model.

"This is an industry-wide issue, and multiple companies are facing avoidable litigation, uncertainty, concerns from investors and customers," NASSCOM said in a statement.

According to NASSCOM, the issue at hand involves the applicability of GST through the reverse charge mechanism (RCM). The GST enforcement authorities have been issuing notices for remittance by the Indian head office to its foreign branches for cases where there is no service between the head office and the foreign branch for this RCM, ignoring that this is not a case of 'import of service' by the head office from the branch.

According to the apex industry body, circular No. 210/4/2024, dated June 26, 2024, states that for the import of services, the deemed open market value of such transactions will be nil if full input tax credit is available. "We will continue to pursue with the government on the need for proper implementation of the government circular by the enforcement authorities," it stated.

Letters addressed by Infosys to BSE LIMITED, NATIONAL STOCK EXCHANGE OF INDIA LIMITED and NEW YORK STOCK EXCHANGE:

July 31, 2024

This is with respect to news articles published earlier today on non- payment of GST in relation to expenses incurred by the overseas branches of the Company.

The Company would like to clarify on this matter:

Karnataka State GST authorities have issued a pre-show cause notice for payment of GST of Rs. 32,403 crores for the period July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys Limited. The Company has responded to the pre-show cause notice. Subsequent to the publication of the news articles the Company has also received a pre-show cause notice from Director General of GST Intelligence on the same matter and the Company is in the process of responding to the same.

The Company believes that as per regulations, GST is not applicable on these expenses. Additionally, as per a recent Circular (circular number 210/4/2024 dated June 26, 2024) 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.

August 1, 2024

The Company has received a communication from Karnataka State authorities, withdrawing the pre-show cause notice and has directed the Company to submit further response to DGGI central authority on this matter.

August 3, 2024

The Company had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022. The Company has now received a communication from DGGI closing the pre-show cause notice proceedings for the financial year 2017-2018. The GST amount as per the pre-show cause notice for this period was Rs. 3,898 Crs.

June 6, 2025 (Last Friday)

In continuation to our earlier communications on July 31, 2024, August 1, 2024, and August 3, 2024, on GST, this is to inform that the Company has today received a communication from the Director General of GST Intelligence ('DGGI') closing the pre-show cause notice proceedings for the financial years 2018-19 to 2021-22. It may be noted that the Company had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022 on the issue of non-payment of IGST under Reverse Charge Mechanism. The GST amount as per the pre-show cause notice for this period was Rs. 32,403 Crs. The Company had on August 3, 2024, received a communication from DGGI closing the pre-show cause notice proceedings for the financial year 2017-2018. With the receipt of today's communication from DGGI, this matter stands closed.