Infosys gets relief on GST as DGGI closes Rs 32,400 Cr pre-show cause notice

In a major relief for IT giant Infosys, the Directorate General of GST Intelligence (DGGI) has closed a pre-show cause notice inquiry involving a potential GST demand of Rs 32,403 crore. The notice pertained to services availed by Infosys from its own overseas offices between July 2017 and March 2022. The tax authorities had initially contended that these services were liable for GST under the Reverse Charge Mechanism. However, Infosys had argued that, as per GST regulations, services received from a company's own foreign branches do not qualify as "imported services" and are therefore not subject to GST. The DGGI's decision to drop the proceedings for the entire period brings an end to a significant tax overhang for the company. The closure of this high-value case is a major positive development for Infosys, removing a substantial potential liability and providing tax certainty on this issue.