Shares of Infosys experienced a decline on Thursday following the receipt of a GST notice alleging a substantial tax evasion of ₹32,000 crore, a claim the IT giant has strongly contested.
Opening at ₹1,850, Infosys shares were trading 0.5% to 1% lower during the day. Despite this drop, the company’s stock has appreciated over 20% since the beginning of the year.
Earlier reports, referencing the Directorate General of GST Intelligence, suggested that Infosys may be liable for Integrated GST (IGST) under a reverse charge mechanism related to supplies received from its international branches. The alleged tax amount for the period from July 2017 to March 2022 stands at ₹32,403.46 crore.
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In a late evening filing with the stock exchange, Infosys refuted the claims. The company clarified that Karnataka State GST authorities had issued a pre-show cause notice demanding ₹32,403 crore in GST payments for the aforementioned period, concerning expenses incurred by its overseas branches.
Infosys stated that it is currently addressing this notice and has also received a pre-show cause notice from the Director General of GST Intelligence on the same issue. The company maintains that, according to regulations, GST should not apply to these expenses. It further highlighted that a recent Circular by the Central Board of Indirect Taxes and Customs, based on GST Council recommendations, exempts services provided by overseas branches to Indian entities from GST.
The company affirmed its compliance with all GST regulations and assured that it has settled all due taxes.
