Infosys : Karnataka Government Withdraws GST Pre-Show Cause Notice

Infosys announced on Friday that Karnataka State authorities are retracting the pre-show cause GST notice issued to the company, which had included a tax demand of Rs 32,403 crore. The company shared this update in a filing with the exchange.

Infosys stated, “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.”

Previously, on Wednesday, Karnataka’s GST authorities had issued the pre-show cause notice, demanding Rs 32,403 crore in GST for the period from July 2017 to March 2022. This demand was related to expenses incurred by Infosys’s overseas branch offices.

In response, Infosys argued that, according to regulations, GST should not apply to these expenses. The company also cited a recent Circular (Circular number 210/4/2024 dated June 26, 2024) from the Central Board of Indirect Taxes and Customs, which clarified that services provided by overseas branches to Indian entities are not subject to GST.

Infosys added, “GST payments are eligible for credit or refund,” and emphasized that it has paid all GST dues and remains fully compliant with central and state regulations.