Infosys Ltd.’s shares are under scrutiny on Friday morning after Karnataka State authorities retracted a pre-show cause notice demanding payment of Rs 32,403 crore in GST and instructed the IT giant to provide additional information to the DGGI central body on the issue. The notice was about a GST claim for the costs incurred by Infosys’ international branch offices between July 2017 and March 2022.
As a recipient of services, Infosys is thought to have failed to pay the Integrated-GST (IGST) on the import of services, according to the Bengaluru-based Directorate General of GST Intelligence. It claims that Infosys established branch offices outside of India and included the costs of operating these in its export invoice.
Infosys’s stock ended the day on the BSE 0.84 percent lower, at Rs 1852.30.
Infosys previously stated in an exchange filing that it thought the restrictions did not apply to these kinds of expenses when it came to GST. Additionally, services rendered by foreign branches to Indian entities are exempt from GST, according to a recent circular dated June 26 issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, Infosys
It’s also crucial to remember that GST payments can be refunded or credited against the export of IT services. Infosys is completely compliant with both federal and state legislation regarding this situation, having paid all of its GST obligations,” Infosys had stated.
The tax claim of Rs 32,403 crore exceeds Infosys’s profit for a full year. In FY24, the large IT company posted a profit of Rs 26,233 crore.
“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,” according to reports in the document that the GST authorities sent to Infosys. Therefore, for the year of 2017–18 (beginning in July 2017) to 2021–22, M/s Infosys Ltd., Bengaluru is required to pay IGST under the reverse charge mechanism on supplies received from branches located outside of India to the tune of Rs 32,403.46 crores.”
Disclaimer: “Newsparviews” provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions