Indian IT Giants in the Crosshairs: Infosys' $4 Billion Tax Battle and Industry Impact

Indian authorities are investigating major IT firms for alleged tax evasion. Infosys has been issued a $4 billion tax demand, with more notices expected for other companies. Infosys maintains it has met its tax obligations and plans to challenge the decision. This scrutiny could set a precedent affecting the industry at large.

Indian authorities may soon issue notices to more major IT services firms in an ongoing investigation into alleged tax evasion by their overseas offices, according to a government source. This comes a day after Infosys was hit with a $4 billion tax demand, the highest-ever for the company.

The government has accused India's second-largest tech services company of evading taxes, seeking 320 billion rupees, which represents almost all of Infosys' revenue for the quarter ending June 30. Infosys responded by stating it had received 'pre-show cause' notices and believes it has paid the appropriate taxes.

This issue is not limited to Infosys but is an industry-wide concern, according to a senior tax official. Tax authorities are likely to send similar notices to other IT companies. India's finance ministry has yet to comment, but experts predict more tax notices are forthcoming, potentially setting a precedent for the sector.

(With inputs from agencies.)