Govt may tweak rules to grant relief to Infosys in Rs 32,000-cr GST demand case: Report

In August, India’s second-largest IT company had received demand for alleged tax evasion of over Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI).

Infosys is likely to get relief in the Rs 32,000-crore GST demand as the finance ministry is expected to amend the circular based on which the tax was sought from the IT services major, the Business Standard reported on September 25.

The ministry could amend its June 26 circular to offer relief to the Bengaluru-based company, the newspaper quoted a senior official as saying.

“The government may make the necessary amendments to the circular (210) to grant relief to Infosys — either by declaring the notices null or void or reducing the tax liability,” the report quoted the official as saying.

Moneycontrol couldn’t verify the report independently.

The Central Board of Indirect Taxes and Customs (CBIC) issued the Circular 210, clarifying valuation of import of services by a related person where the recipient is eligible for full input tax credit (ITC), the report said.

The official said CBIC was reviewing the pre-show cause notices issued to Infosys and would conduct a year-by-year analysis of the case.

In late July, India’s second-largest IT company received demand notices for alleged tax evasion of over Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI).

"In lieu of receipt of supplies from overseas branch offices, the Company has paid consideration to the branch offices in the form of overseas branch expense. Hence, M/s Infosys Ltd, Bengaluru is liable to pay IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of Rs. 32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22.," the tax demand document read.

Infosys later said DGGI had closed the pre-show cause notice proceedings worth Rs 3,898 crore for FY18.