Centre likely to accept Infosys’ plea on GST notice
₹32,403.46 crore in integrated GST (IGST) over five years between July 2017 and March 2022 for “supply of services" by its foreign branches. On Thursday, Infosys informed stock exchanges that the Karnataka State GST authorities, a reference to the zonal office of DGGI, had withdrawn the pre-show cause notice and directed it to respond to DGGI's central authority on the matter. The company had received pre-show cause notice on the same matter from both the central and state offices of DGGI.
“No tax demand has been raised; only pre-show cause notices were sent," said the person cited above, who spoke on condition of not being named. “The (taxpayer’s) plea in light of the CBIC circular on import of services by a related person will likely be accepted." The CBIC (Central Board of Indirect Taxes and Customs) had on 26 June stated in a circular that services rendered by the overseas branches of an Indian firm would not attract GST. The circular came after the authority received representations from the IT industry in this regard.
CBIC is the apex indirect tax authority of the central government. The DGGI is part of the tax administration ecosystem. A second official, who also spoke on condition of anonymity, said that the central government was actively discussing the Infosys tax matter for an early resolution.
The government’s intention to resolve the case early comes at a time when India is signalling to the world that it is serious about attracting investments, offering policy stability and ensuring an investor-friendly environment. Emails sent on Thursday and Friday to Infosys, CBIC, DGGI and the finance ministry seeking comments remained unanswered till press time. Tax disputes arise in the case of intra-group supply of
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