India’s second largest IT company Infosys has received a GST demand of Rs 32,403 crore. A Reuters report claims that this demand is related to the services provided by Infosys to its foreign branches during a period of five years starting from 2017. The tax document states that Infosys gave rewards to its foreign branches as expenses, due to which the company will be held liable to pay this IGST under the Reverse Charge Mechanism (RCM).
According to the report, Infosys owes Rs 32,403.46 crore as GST from July 2017 to 2021-22. According to the RCM system, the receiver of goods or services will have to pay the tax instead of the supplier. As soon as this news came, Infosys shares fell sharply. On Thursday, the stock closed down 1.10 percent at Rs 1,847.65.
The company said there is no outstanding amount
Meanwhile, in an exchange filing, Infosys informed that it has paid all the dues and said that GST is not applicable on the expenses claimed by DGGI. The company said, “Infosys has paid all its GST dues and is fully complying with the central and state rules in this matter.”
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“The company believes that as per the rules, GST is not applicable on these expenses. Additionally, as per the recent circular issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, services provided by overseas branches to Indian units are not subject to GST. It is also important to note that GST payments are eligible for credit or refund against export of IT services.
Claim of non-payment in document
The document reportedly stated that Infosys had included the expenses incurred by its overseas branches as part of its export invoices from India. Based on these export values, the company calculated the eligible refund. Intelligence gathered by officials of the Directorate General of GST Intelligence (DGGI) in Bengaluru indicated that Infosys had not paid IGST under RCM on import of services from its overseas branches.
Former Infosys CFO Mohandas Pai wrote on social media, “If this notice is true, it is outrageous – the worst case of tax terrorism. India is not under service export GST. Can the authorities interpret it as they wish?”
Source (PTI) (NDTV) (HINDUSTANTIMES)