Recently, the Karnataka government slapped India’s second-largest IT company with a GST tax evasion notice for more than INR 32,000 crores. Infosys, a Bengaluru-headquartered IT giant, reported that they received the pre-show cause notice for the period of July 2017 to March 2022 regarding the expenses incurred by overseas branch offices of Infosys Limited. Further, the company also argued that they were eligible for credit or refund against the export of IT services.
However, the Karnataka government temporarily withdrew the GST demand notice and asked the company to respond to the central authorities instead. Infosys, in their late evening filing of the stock exchanges, mentioned, “The company has received a communication from Karnataka State authorities, withdrawing the pre-show cause notice and has directed the company to submit a further response to submit a further response to DGGI central authority on this matter.”
Infosys is not the only IT company that will receive a GST notice from the taxation authorities for tax evasion. However, this news is not confirmed yet, and the names of the companies have not been revealed yet. However, a source mentioned this to Reuters. Also, one senior tax official with knowledge of the matter mentioned, “This is an industry-wide issue.” Further, attesting to the information given by the source.
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Nasscom Comes In Support Of IT Companies
NASSCOM (National Association of Software and Service Companies) is a trade association of the Indian Information Technology (IT) and Business Process Outsourcing (BPO) industry. It strongly supports IT companies and mentions that the government lacks an understanding of how IT companies work.
The Company said, “Recent media reports of a GST demand of over ₹32,403 crores reflects a lack of understanding of the industry’s operating model. This is an industry-wide issue, and multiple companies are facing avoidable litigation, uncertainty, and concerns from investors and customers.”
