Karnataka Withdraws GST Demand on Infosys After Rs 32,403 Crore Notice

Karnataka state authorities withdrew a Rs 32,403 crore GST demand 'pre-show cause' notice against Infosys, directing further response to the Directorate General of GST Intelligence. The demand, covering services availed from overseas branches between 2017 and 2022, was contested by Infosys, which argued that GST is not applicable as per current regulations.

In a significant development, Karnataka state authorities have retracted a Rs 32,403 crore GST demand 'pre-show cause' notice issued to Infosys. The company has been directed to provide a further response to the Directorate General of GST Intelligence (DGGI) regarding the matter. The initial demand covered services availed by Infosys from its overseas branches from 2017 to 2022.

This issue grabbed headlines when Infosys revealed the GST authorities' massive demand, which the company strongly contested as being unjustified. According to Infosys, current regulations, including a recent circular from the Central Board of Indirect Taxes and Customs (CBIC), exclude such expenses from GST. Furthermore, Infosys reiterated that it has always complied with GST regulations and paid all dues accordingly.

Industry body Nasscom has weighed in, articulating that such demands highlight a broader systemic issue impacting multiple companies in the sector. Nasscom emphasized that government circulars based on GST Council recommendations should be respected to avoid uncertainty and maintain India's business-friendly image.

(With inputs from agencies.)