(Image source from: Facebook.com/Infosys)

The GST authorities have levied an assessment of Rs 32,403 crore on services received by Infosys from overseas subsidiaries for five years from 2017. In a filing to the stock exchanges, Infosys termed the notification as a 'cause-before-show' notification and said GST would not be applicable on these charges. The Bangalore-headquartered IT company will pay GST of Rs 32.43 billion for the period July 2017 to March 2022 on expenses incurred by the overseas subsidiaries of Infosys Limited by the Karnataka GST authorities. The company responded to a message on the occasion of the exhibition. “The company has also received a communication in this regard from the Director General of GST Information regarding the issuance prior to the issuance and is taking necessary action,” the filing said. The company believes that such expenditure is not subject to GST as per the regulations. Infosys said, "Furthermore, services provided by overseas subsidiaries to Indian companies are not subject to GST as per the recent circular issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council."

Infosys claimed that payment of GST on export of IT services can be credited or refunded. "Infosys has paid all GST taxes and is fully compliant with central and state regulations in this regard," the company claimed. According to reports, the letter from the GST authorities to Infosys said, “Instead of receiving goods from branches abroad, the company paid foreign branch fees to the branch. Accordingly, M/s Infosys Ltd has collected Bengaluru for the period 2017-18 (after July 2017) to 2021-22 through reverse charge mechanism in respect of sources sourced from IGST liable branches outside India. The GST Information Authority, Bangalore, found that Infosys, as a recipient of the services, had not paid Integrated GST (IGST) on import of services. Infosys claims that it has set up offices outside India and included these costs in its export invoices. The demand is Rs 32,403 crore, which is an annual profit of Infosys. In the June quarter, Infosys' net profit rose 7.1 per cent year-on-year to Rs 6,368 crore, while operating profit stood at Rs 39,315 crore, up 3.6 per cent year-on-year. Infosys maintains the Goods and Services Tax Network (GSTN) portal, so the demand for GST is sure to attract attention. In 2015, Infosys signed a deal worth Rs 1,380 crore to build a technology platform for Goods and Services Tax (GST).