Thursday, August 1, 2024: Nasscom has come forward to defend Infosys after the company received a ₹32,000 crore GST notice from the Directorate General of GST Intelligence (DGGI). Nasscom argued that the notice reflects a misunderstanding of the IT industry’s business model. The notice alleges that Infosys underpaid taxes on export services, claiming tax exemptions under wrong categories. Nasscom emphasized that such complex tax issues require more clarity in regulations.
Nasscom CEO Debjani Ghosh stated that the notice overlooks the industry’s unique operating model, which involves cross-border services and specialized tax treatments. Ghosh argued that the Indian IT sector, including companies like Infosys, operates under global contracts and uses transfer pricing mechanisms to ensure compliance with international tax laws. These practices are not attempts to evade taxes but rather are standard industry practices.
Table of Details
Company
GST Notice Amount
Allegation
Nasscom’s Response
Infosys
₹32,000 crore
Underpayment of taxes on export services
Misunderstanding of IT sector’s complex operating model
Nasscom has called for a detailed review of the regulations and for the authorities to work closely with the industry to better understand the nuances. The association has also requested a dialogue between the government and the industry to ensure fair tax practices without disrupting business operations.
Background: The issue arose from a dispute over the classification of certain export services, which Infosys claimed were exempt under the Integrated Goods and Services Tax (IGST). The tax authorities, however, argued that the services did not qualify for the exemption, leading to the massive demand for tax and penalties.
Nasscom highlighted the industry’s contribution to the Indian economy and stressed that such actions could impact the confidence of global clients and investors in Indian IT companies. They urged the government to consider the broader implications and work towards a resolution that supports business growth while ensuring tax compliance.
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