The Indian government is not considering any relaxation over the Rs 32,000-crore tax demand it sent to Infosys Ltd, Reuters reported on August 6 citing a government source.
The tax demand on Infosys is in accordance to the good and services tax rules and the country's second-largest IT services firm has sought ten days to submit its response after meeting tax officials, the source said.
Meanwhile, CNBC-TV18 reported on August 6 that Infosys had sought 10 days to reply to the pre-show cause notice after a meeting with Directorate General of GST Intelligence (DGGI) Bengaluru on August 5.
Shares of Infosys, which were up 1.6 percent on August 6 before the report amid a broader market rebound, trimmed gains to about 0.3 percent after the report.
CNBC-TV18 reported, citing sources, that DGGI said pre-show cause notice was sent after proper assessment and due diligence.
Infosys had made headlines last week after GST authorities slapped a Rs 32,403 crore notice on it for services availed by the company from its overseas branches for five years starting 2017. This amounts to 85 percent of its revenue for the quarter ended June 30.
The company had described the notice a ‘pre-show cause’ notice and categorically maintained that it believes that GST is not applicable on expenses mentioned.
Infosys had strongly argued that GST payments are eligible for credit or refund against export of IT services.
“Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter,” the company had contended.
Last week, apex IT body Nasscom said the latest tax demand reflects a lack of understanding of the industry’s operating model and sheds light on sector-wide issues wherein multiple companies are facing avoidable litigation and uncertainty.
In a detailed statement issued a day after Infosys’ BSE filing on GST ‘pre-show cause’ notice, Nasscom asserted that government circulars issued based on recommendations of the GST Council must be honoured in enforcement mechanisms so that notices do not create uncertainty and negatively impact perceptions on India’s ease of doing business.
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