Infosys gets relief in ₹3,898 crore FY18 GST case
The Directorate General of Goods and Services Tax Intelligence (DGGI) has resolved a tax case involving IT giant Infosys for the fiscal year 2017-18. The company disclosed to exchanges yesterday, that the Goods and Services Tax (GST) amount for this period was ₹3,898 crore. This development follows the retraction of a ₹32,000 crore GST notice issued by Karnataka's state GST authority to the firm.
Uncertainty remains for subsequent fiscal years
The status of notices served for subsequent fiscal years (2018-19, 2019-20, 2020-21, and 2021-22) remains unclear. The GST demand raised for FY18 is set to be terminated on August 5. The issue revolves around the alleged non-payment of integrated GST (IGST) under the reverse charge mechanism (RCM), for services claimed to have been received from its foreign affiliate. Infosys is accused of not paying IGST on services received from overseas branches under RCM.
Infosys responds to pre-show cause notice
Infosys had received and responded to a pre-show cause notice from DGGI for the period from July 2017 to March 2022. The company stated, "The company has now received a communication from DGGI closing the pre-show cause notice proceedings for the financial year 2017-2018." It further clarified that "The GST amount as per the pre-show cause notice for this period was ₹3,898 crore."
CBIC reviewing Infosys's case
The Central Board of Indirect Taxes and Customs (CBIC) is currently reviewing the case under a June 26 circular. This document states that for import of services, the deemed open market value of such transactions will be NIL if full input tax credit is available. However, it remains to be seen whether Infosys qualifies for this review or not.
