Infosys has achieved a significant legal victory with the Directorate General of GST Intelligence (DGGI) officially closing a massive GST demand notice amounting to Rs 32,403 crore. This decision ends a prolonged tax dispute that had been under intense scrutiny since July 2024.
Background of the Dispute
The controversy arose from allegations that Infosys had not paid Integrated GST (IGST) under the Reverse Charge Mechanism (RCM) for services availed from its overseas branches during the period from July 2017 to March 2022. The DGGI had issued a pre-show cause notice covering financial years 2017-18 to 2021-22, claiming a substantial tax liability. Infosys contested these claims, maintaining that it complied fully with the applicable GST laws and regulations.
Resolution and Official Closure
In a recent regulatory filing, Infosys confirmed receipt of official communication from the DGGI dated June 6, 2025, stating the closure of the pre-show cause notice proceedings for the financial years in question. With this closure, Infosys considers the matter fully resolved, marking the end of a multi-year investigation into its inter-branch service transactions.
Positive Market Response
Following the announcement, Infosys' shares responded positively, closing 0.62% higher at Rs 1,564.05 on June 6, 2025. This uptick signals renewed investor confidence in the company's governance and financial outlook.
Implications for the Indian IT Sector
The resolution of this case brings considerable relief to not just Infosys but the entire Indian IT industry. The tax dispute had raised broader concerns about the interpretation of GST laws related to inter-branch transactions for multinational companies operating in India. The closure highlights the necessity of clear, balanced, and transparent tax policies to support a stable and business-friendly regulatory environment.
Experts expect this precedent to shape future GST interpretations, ensuring alignment with international business practices and providing clarity for Indian and global firms alike.
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