Infosys under scanner over Rs 32,000 crore alleged GST evasion
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New Delhi: The Directorate General of Goods and Service Tax Intelligence, a law enforcement agency under the Union Ministry of Finance, is probing the Bengaluru-based information technology company, Infosys, for the alleged tax evasion, Scroll reported.
It is reported that Infosys allegedly evaded over Rs 32,000 crore in integrated Goods and Services Tax over five years.
Following news reports, Infosys said in a stock exchange filing acknowledging that it got a ‘pre-show cause’ notice from the agency alongside claiming that ‘GST did not apply to the expenses in contention’, according to The Indian Express.
The Directorate General of GST Intelligence alleged in a notice on Tuesday that Infosys was under observation for the “non-payment of IGST [integrated GST] on import of services as recipient of services” between July 2017 to March 2022.
The integrated Goods and Services Tax, levied on the inter-state supply of goods and services, is an indirect tax.
It is reported citing the law enforcement that Infosys created overseas branches to service clients over its agreement with them.
Under the Integrated GST Act, these branches and the company are treated as “distinct persons” .
“Thus, in lieu of receipt of supplies from overseas branch offices, the company has paid consideration to the branch offices in the form of overseas branch expense,” the notice was quoted as saying, adding “Hence M/s Infosys Ltd Bengaluru is liable to pay GST under the reverse charge mechanism on supplies received from branches located outside India.”
A further investigation into the matter is underway, according to the Directorate General of GST Intelligence.
Following media reports, Infosys acknowledged the receipt of a ‘pre-show cause notice’ for a tax claim of Rs 32,403 crore in GST.
The company said the tax claim was on expenses incurred by the company’s overseas branch offices for the period between July 2017 and March 2022.
The company made it clear in its exchange filing: “…the company has also received a pre-show cause notice from the Director General of GST Intelligence on the same matter and the company is in the process of responding to the same.”