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India’s second-largest IT company Infosys has received demand for alleged tax evasion of over Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI), according to a document viewed by Moneycontrol.
"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. Hence, M/s Infosys Ltd, Bengaluru is liable to pay IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of Rs. 32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22.," the document read.
The Reverse Charge Mechanism (RCM) in Goods and Services Tax (GST) is a system where the recipient of goods or services is liable to pay the tax instead of the supplier.
The document further says that Infosys was including the expenses incurred towards overseas branches as part of their export invoice from India and basis the said export values, was computing the eligible refund.
"The receipt of export proceeds and export invoice related to the project was being raised by the Company," the document reads.
Infosys, in an exchange filing, said it has paid all dues and GST is not applicable on expenses claimed by DGGI. "Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter," the company said in the filing.
The document also reveals intelligence gathered and developed by the officers of Bengaluru's DGGI indicating that the company has received services from overseas branches and has not paid Integrated Goods and Services Tax (IGST) under RCM on the import of services.
The amount of penalty alleged against the Bengaluru-based company is approximately a year's profit and about a quarter's worth of revenue. For the quarter ended June 30, Infosys' net profit rose 7.1 percent on-year to Rs 6,368 crore, while the consolidated revenue from operations rose 3.6 percent on-year to Rs 39,315 crore.
Infosys manages the Goods and Services Tax Network (GSTN) portal. GSTN has built the indirect taxation platform for GST to help taxpayers in India prepare, file returns, make payments of indirect tax liabilities, and do other compliances.
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