Infosys shares in focus as ₹32,400-crore GST demand notice withdrawn; check details

Shares of information technology (IT) major Infosys will be in focus on Friday after the company informed that the Karnataka state authorities have withdrawn the 'pre-show cause' notice to the consulting behemoth and directed it to submit a response to the Directorate General of GST Intelligence (DGGI) on the issue.

India's second-largest software exporter was in the news on Wednesday after it received ₹32,403 crore notice from GST authorities for services availed by the from its overseas branches for a period of five years starting in 2017.

Karnataka authorities have withdrawn GST notice: Infosys

In an exchange filing late Thursday, the IT giant said, "The company has received a communication from Karnataka State authorities withdrawing the pre-show cause notice and has directed the company to submit a further response to DGGI central authority on this matter."

The Bengaluru-headquartered company on Wednesday disclosed that Karnataka GST authorities had issued a pre-show cause notice for payment of GST of ₹32,403 crore for the period July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys Ltd and added that the company has responded to the notice.

"...the Company has also received a pre-show cause notice from the Director General of GST Intelligence on the same matter, and the Company is in the process of responding to it," Infosys said in the statutory filing on Wednesday.

The company believes that, as per regulations, GST does not apply to such expenses.

"Additionally, as per a recent Circular...issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, services provided by the overseas branches to Indian entity are not subject to GST," Infosys had said.

Infosys had vigorously argued that GST payments are eligible for credit or refund against the export of IT services.

The company contended that "Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter."

On August 1, Infosys shares settled 1.1% lower at ₹1,847.6 on the NSE.