Infosys, one of India’s leading IT services firms, is under scrutiny following the receipt of a 'pre-show cause' notice from Karnataka State GST authorities. This notice pertains to an alleged GST evasion involving approximately Rs 32,403 crore, which concerns expenses incurred by Infosys’ overseas branch offices from July 2017 to March 2022. The company disclosed this development in a recent filing with the Bombay Stock Exchange (BSE).

According to Infosys, the Karnataka GST authorities have issued the notice demanding payment for the specified period. Additionally, the Director General of GST Intelligence has also issued a pre-show cause notice on the same matter. Infosys has stated that it is actively engaging in responding to both notices.

The IT giant argues that, according to existing regulations, GST should not apply to the expenses in question. They cited a recent Circular from the Central Board of Indirect Taxes and Customs, which, based on recommendations from the GST Council, stipulates that services provided by overseas branches to Indian entities are exempt from GST. 

Infosys asserts that it is compliant with both central and state GST regulations, claiming that GST payments are eligible for credit or refund when applied against the export of IT services. The company maintains that it has settled all GST dues as required and is in full adherence to the regulatory framework governing these transactions.

As of July 31, Infosys has a market capitalization of Rs 7.74 lakh crore, underscoring its significant presence in the Indian and global IT sectors. The ongoing investigation and the company’s response to the notices will be closely watched by industry stakeholders.