Advocacy group of the information technology industry - National Association of Software and Service Companies (NASSCOM) - and the India Trade Association have come out strongly in support of IT major Infosys which has been slapped with a Rs 32,403- crore GST notice for services availed from overseas branches for last five years.
The staggering tax demand of Rs 32,403 crore is more than annual profits of Infosys. Infosy's ex-CFO Mohandas Pai said the GST demand was the "worse form of tax terrorism." He has sought the immediate intervention of the Union finance ministry.
In a post on X (erstwhile twitter) Pai warned that "trust in government policy is being destroyed by tax authorities." Tagging Prime Minister Narendra Modi and finance minister Nirmala Sitharaman, Pai asked "where is stability, certainty in government tax policy? Who runs the tax department; our elected leaders or the tax department."
Pai's trenchant criticism of the BJP-led Union government is significant since he is widely perceived to be pro-BJP.
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Nasscom flagged the applicability of GST through reverse charge mechanism reflecting the lack of understating the IT industry operating model.
The IT industry body asserted it was crucial that compliance obligation for the tax authority are not subject to multiple interpretation to attract global tech investments to India and accelerate exports of IT services.
“A supportive policy environment is required for ease of doing business. The government circulars based on the recommendations of GST council must be honoured. Such (GST) notices create uncertainty and negatively impacts perception on ease of doing business in India,” said Nasscom in a statement on Thursday.
Infosys said the notice was “a pre show cause” notice and it believes that GST is not applicable to the expenses incurred by its overseas branch offices.
The Bengaluru- headquartered IT major argued that GST payments are eligible for credit or refund against the export of IT services. “Infosys has paid all the GST dues and is in full compliance with the tax regulations,” the company observed in a statement.
