After Infosys, more IT companies might face GST notices for alleged tax evasion: Report

Infosys has announced that Karnataka State GST authorities have issued a pre-show cause notice demanding ₹32,403 crore in GST payments for the period from July 2017 to March 2022. This notice pertains to expenses incurred by Infosys’s overseas branch offices.

Following this development, there are concerns that other IT companies might also receive similar notices related to tax evasion involving their foreign offices. According to a Reuters report, the IT industry body Nasscom has criticised the latest tax demands, suggesting they reflect a misunderstanding of the sector’s operating model.

Nasscom argued that the GST enforcement authorities are incorrectly applying rules, which is causing unnecessary litigation and uncertainty. The body emphasised that government circulars based on GST Council recommendations should be respected to avoid disrupting India's ease of doing business.

Infosys has contested the GST demand, asserting that such payments should be eligible for credit or refund against IT service exports. Nasscom supports this stance, highlighting that previous court rulings and a recent circular from the Ministry of Finance have favoured the industry on similar issues.

The IT industry is facing significant concerns over these GST notices, with Nasscom urging for clarity to prevent further legal complications and maintain investor confidence.