Former Infosys board member and Chief Financial Officer Mohandas Pai has slammed the Rs 32,000 crore Goods and Services Act (GST) demand sent to the software firm, dubbing it 'tax terrorism' at its worst.
The tax demand made by the Bengaluru GST office generated shockwaves, considering Infosys' track record for being one of India's best-governed firms.
The demand alleged tax evasion of over Rs 32,000 crore in integrated goods and service tax (IGST) from the Directorate General of GST Intelligence (DGGI), according to a document viewed by Moneycontrol.
Infosys, in an exchange filing, said it has paid all dues and GST is not applicable on expenses claimed by DGGI. "Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter," the company said in the filing.
"Finance ministry should immediately intervene. Such tax terrorism impacts investment into India in a big way," Pai, who is also the Chairman of Aarin Capital, told Moneycontrol in a telephonic conversation.
He further said that Indian software service companies have been exporting for more than 30 years, and generate about 95 percent of export revenues. Adding that exports are exempt under GST value added tax (VAT). “This so called notice, if true, is a classic case of tax terrorism. It is outrageous.”
He alleged that some people in the GST department have let their imagination “run riot” and are bent on harassing exporters, by interpreting the law in any manner they wish.
“This is no way for the GST department to harass taxpayers. This is not the ease of business promised to business by Prime Minister Modi,” Pai said.
He elaborated that it is very clear that some officials are out to disrupt business by making such outrageous demands without “proper application of mind.”
Pai called upon technology industry body Nasscom to immediately intervene on behalf of the industry, and stop further deterioration of business in India.
“Every large MNC (multinational company) operating, every large GCC (Global Capability Centre), and Indian IT service giants would get very upset at the way they are being treated. Such tax terrorism impacts investment into India in a big way,” Paid said.
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