The document states, "In lieu of receipt of supplies from overseas branch offices, the Company has paid consideration to the branch offices in the form of overseas branch expense. Hence, M/s Infosys Ltd, Bengaluru is liable to pay IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of Rs. 32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22."
In the Goods and Services Tax (GST) system, the Reverse Charge Mechanism (RCM) requires the recipient of goods or services to pay the tax, rather than the supplier.
The document also mentions that Infosys included expenses from overseas branches in their export invoices from India. Based on these export values, they calculated the eligible refund. "The receipt of export proceeds and export invoice related to the project was being raised by the Company," it reads.
Further intelligence from the DGGI officers in Bengaluru suggests that Infosys received services from overseas branches but did not pay Integrated Goods and Services Tax (IGST) under the RCM on these imported services.
The penalty amount is significant, roughly equivalent to a year's profit for the company and about half of its quarterly revenue. For the quarter ending June 30, Infosys reported a net profit increase of 7.1 percent year-on-year, reaching Rs 6,368 crore. The consolidated revenue from operations also rose by 3.6 percent year-on-year, totaling Rs 39,315 crore.
Infosys plays a crucial role in managing the Goods and Services Tax Network (GSTN) portal. GSTN has developed the indirect taxation platform for GST, assisting taxpayers in India with preparing and filing returns, making payments of indirect tax liabilities, and other compliance activities.
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