Infosys, a leading provider of IT services, received some respite from the Goods and Services Tax (GST) investigative arm, the Directorate General of Goods and Services Tax Intelligence (DGGI), on Saturday evening. The business reported to exchanges that the tax proceedings for the financial year 2017–18 (FY18) have been closed. During this time, there was Rs 3,898 crore in GST.
The action comes after the Karnataka state GST authorities withdrew a GST notice worth Rs 32,000 crore that was sent to Infosys.
The notifications served for the IT major for the future fiscal years (2018–19, 2019–20, 2020–21, and 2021–22) are unclear, nevertheless.
Notably, on August 5, the GST demand raised for FY18 becomes time-barred.
The issue concerns the reverse charge mechanism (RCM) unpaid integrated GST (IGST) for services that the company claims to have received from its foreign affiliate. According to reports, Infosys failed to pay IGST on services obtained from foreign operations under RCM.
The business was served with a pre-show cause notice by DGGI covering the period from July 2017 to March 2022, to which it replied. DGGI has now sent a message to the company ending the pre-show cause notice proceedings for the 2017–2018 fiscal year.
“The GST amount as per the pre-show cause notice for this period was Rs 3,898 crore,” said Infosys.
According to sources, the case is being examined by the Central Board of Indirect Taxes and Customs (CBIC) in accordance with the June 26 directive. According to the circular, if full input tax credit is available, the presumed open market value of services import transactions will be NIL. The decision on Infosys’ eligibility for this review is still pending.