Infosys Ltd has been granted a tax relief of ₹3,898 crore for the financial year 2017-18, as detailed in a company filing to the exchanges. The IT giant had previously received a pre-show cause notice from the Directorate General of Goods and Services Tax Intelligence (DGGI) for the period from July 2017 to March 2022.
In the filing, Infosys stated, “The Company had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022. The Company has now received a communication from DGGI closing the pre-show cause notice proceedings for the financial year 2017-2018. The GST amount as per the pre-show cause notice for this period was ₹3,898 crore.”
The DGGI serves as the investigative arm for the Goods and Services Tax (GST). This development comes after the Karnataka state GST body withdrew a substantial ₹32,403 crore notice issued to Infosys for unpaid integrated GST (IGST) under the reverse charge mechanism (RCM) for services availed from its overseas branches during 2017-2022.
According to a Business Standard report, notices for the financial years 2018-19, 2019-20, 2020-21, and 2021-22 were not addressed, and the GST demand for 2017-18 is becoming time-barred. The Central Board of Indirect Taxes and Customs (CBIC) is reviewing the situation. If the full input tax credit is available, the deemed market value of imported services is considered NIL, but it is still uncertain if Infosys is eligible for this credit.
An Indian Express report, citing unnamed officials, suggests that notices for the remaining years may also be withdrawn soon.
This partial tax relief is a significant development for Infosys as the situation continues to unfold under the scrutiny of tax authorities.
