Infosys under investigation for GST evasion of over ₹32,000cr
Infosys, a prominent IT services firm, is being investigated by the Directorate General of GST Intelligence (DGGI) for allegedly evading over ₹32,000 crore in integrated goods and service tax (IGST). The probe covers a period from July 2017 to fiscal year 2021-2022. The focus of the investigation is on 'non-payment of IGST on import of services as recipient of services,' according to ET Prime.
DGGI probes Infosys's overseas operations
The DGGI's investigation into Infosys is centered around the company's strategy of establishing foreign branches to cater to clients. As per the IGST Act, these branches and Infosys are considered as 'distinct persons.' The internal document states that "in lieu of receipt of supplies from overseas branch offices, the company has paid consideration to the branch offices in the form of overseas branch expense."
GST obligations under scrutiny
The DGGI document seen by ET Prime further clarifies that "Hence M/s Infosys Ltd Bengaluru is liable to pay GST under the reverse charge mechanism on supplies received from branches located outside India." The investigation is ongoing and may lead to a case report, a visit from a DGGI official, or a demand for information and summons. Infosys has reportedly been notified about this investigation by the DGGI.
Infosys assures of compliance with GST laws
Despite the ongoing investigation, sources close to the matter have stated that Infosys believes it is in full compliance with both state as well as central GST laws. The company has not yet responded to requests for comment regarding this matter. This is not the first time Infosys has faced scrutiny from the GST Department. In April, it was fined ₹1.46 lakh by the Odisha GST Authority for availing ineligible input tax credit.
