In a major reprieve for Infosys, India’s second-largest IT services firm, the Directorate General of GST Intelligence (DGGI) has officially closed proceedings related to a massive ₹32,403 crore Goods and Services Tax (GST) demand. The move brings to an end a year-long legal and regulatory standoff concerning alleged unpaid taxes on services availed from Infosys’s overseas branches between July 2017 and March 2022.
The closure of the pre-show cause notice proceedings comes as a significant relief to the Bengaluru-based tech giant. Notably, the GST demand exceeded the company’s full-year net profit for FY25, which stood at ₹26,713 crore.
In a stock exchange filing on Friday evening, Infosys confirmed the development:
“In continuation to our earlier communications dated July 31, August 1, and August 3, 2024, this is to inform that the company has today received a communication from the Director General of GST Intelligence (DGGI) closing the pre-show cause notice proceedings for the financial years 2018-19 to 2021-22. With the receipt of today’s communication, this matter stands closed.”
Last year, Infosys had disclosed that the Karnataka State GST Department had issued a pre-show cause notice for ₹32,403 crore, linked to the expenses incurred by its overseas branches. The notice claimed non-payment of Integrated GST (IGST) under the reverse charge mechanism.
The tech firm, however, consistently maintained that GST was not applicable on these overseas branch transactions, arguing that such services were not subject to GST under the provisions clarified by the Central Board of Indirect Taxes and Customs (CBIC) based on GST Council recommendations. Infosys had also asserted that any applicable GST would be creditable or refundable against exports.
Earlier, in August 2024, the DGGI had closed proceedings for FY 2017–18. With the latest communication covering FY 2018–19 to FY 2021–22, the entire case has now been resolved in Infosys’s favor.
Infosys, which competes with global tech giants such as TCS and Wipro, said it had cooperated fully with authorities and responded to all communications. The resolution not only lifts a massive financial cloud from the company but also reaffirms the legal stance it had adopted throughout the probe.
The decision is expected to bolster investor sentiment and boost confidence across the broader IT sector amid continuing regulatory scrutiny and evolving tax frameworks.