Karnataka withdraws pre-show cause IGST notice to Infosys
Infosys acknowledged the receipt of a notice for alleged evasion of over Rs 32,000 crore ($3.8 billion) in integrated goods and services tax (IGST), the IT major said it has received a communication from Karnataka State authorities, withdrawing the pre-show cause notice.
In a late exchange filing on Thursday, the Bengaluru-based IT firm said, “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.”
The development comes after a hue and cry raised by industry leaders and association post the media reports of a GST demand on Infosys. Earlier in the day, industry body, nasscom said that the recent episode reflects GST enforcement mechanism’s lack of understanding of IT industry operating model. It added that it is not a case of ‘import of service’ by the head office from the branch, as made out to be.
The body added that this is an industry wide issue, and multiple companies are facing avoidable litigation, uncertainty, concerns from investors and customers. nasscom had requested the Ministry of Finance to issue a circular to clarify the position so that the industry can avoid this litigation risk.
Two IT veterans spoke to ET on the condition of anonymity on the topic of Infosys receiving IGST evasion. A CFO of an Indian IT firm, said, IT firms deal in foreign lands either through branches or subsidiaries. “Infosys has a lot of foreign branches relative to other
