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Introduction In a significant move that could avert a potentially damaging tax litigation, the central government is likely to accept Infosys Ltd.s plea that Goods and Services Tax (GST) does not apply to the services the company avails from its offshore branch offices. This decision follows a pre-show cause notice issued by the Bengaluru office of the Directorate General of GST Intelligence (DGGI), which flagged non-payment of ₹32,403.46 crore in integrated GST (IGST) by Infosys over a five-ye
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FAQ :
Infosys received a pre-show cause notice from the Directorate General of GST Intelligence (DGGI) flagging non-payment of ₹32,403.46 crore in integrated GST (IGST) on services availed from its offshore branch offices.
Infosys contends that GST does not apply to the services it receives from its offshore branch offices, citing a recent clarification from the Central Board of Indirect Taxes and Customs (CBIC).
The Karnataka State GST authorities have withdrawn their pre-show cause notice and directed Infosys to respond to the DGGI's central authority. Both central and state DGGI offices had issued notices on the same matter.
The CBIC circular issued on June 26 clarifies that services provided by overseas branches of an Indian firm are not subject to GST, addressing concerns about the taxation of intra-group services.
Tax disputes often occur because, under GST rules, different offices or units of the same company located in different states are treated as separate entities.
The central government is actively discussing the Infosys tax matter for an early resolution, aiming to attract investments, ensure policy stability, and maintain an investor-friendly environment.
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