Winning Bizness Desk

Mumbai. Infosys, India's largest IT company, has been accused of tax evasion amounting to ₹32,000 crore. The Karnataka State GST officials and the Directorate General of GST Intelligence (DGGI) issued a notice to the company regarding this matter. However, Infosys has firmly denied the allegations. The alleged tax evasion pertains to the period from July 2017 to March 2022. It has been claimed that Infosys received services from its foreign branches without paying the corresponding taxes. In an exchange filing on Wednesday, Infosys stated that GST is not applicable on these expenses according to the prevailing rules. The company affirmed that all GST dues have been paid and that it fully complies with both central and state regulations. Infosys has responded to the Karnataka State GST officials' notice and is also addressing the DGGI's notice.

DGGI's Stand on the Matter

The DGGI, in its report, stated that services received from foreign branches are considered imports under Section 2 (11) of the IGST Act 2017. Therefore, Infosys is required to pay taxes under the reverse charge mechanism for services obtained from branches outside the country. According to the DGGI, Infosys owes ₹32,403 crore in IGST for the period from July 2017 to 2022. The reverse charge mechanism under GST mandates that the recipient of goods and services is responsible for paying the tax. The report also mentioned that Infosys established these foreign branches to manage on-site project work and did not pay taxes under the reverse charge mechanism for the services received.

Infosys' Stock Performance

As of today, Infosys stock is trading at ₹1,857, showing a decline of 0.59%. Over the past year, the stock has risen by 36.05%. In the last month, it gained 16.75%, in the last six months 12.08%, and 19.72% since the beginning of the year. For the April-June quarter, Infosys reported a net profit of ₹6,368 crore, a 7.1% increase year-on-year. However, this marks a 20.1% decline from the previous quarter's (Q4FY24) net profit of ₹ 7,969 crore. The Q1FY25 results were announced on July 18.

Infosys: A Brief Overview

Founded in 1981 by Nandan M. Nilekani with a capital of $250 (approximately ₹21,000 today), Infosys has grown into a global consulting and IT services giant listed on the NYSE. The company boasts a market cap of ₹7.28 lakh crore and serves over 1,800 customers across more than 56 countries. Infosys operates 13 subsidiary companies worldwide. Currently, Salil Parekh serves as the CEO and Managing Director, with D. Sundaram as the lead independent director.