Infosys gets a Rs 26.5 lakh IGST demand, penalty of Rs 2.6 lakh, and interest demand of Rs 8.58 lakh
Infosys, a leading Indian IT company, has received a demand notice from the Commercial Taxes Department for Rs 26.5 lakh in integrated goods and services tax (IGST), along with a penalty of Rs 2.6 lakh and interest charges of Rs 8.58 lakh. The demand is reportedly related to the non-receipt of foreign inward remittances for export proceeds during the period of October-November 2021 within the stipulated timelines.
What is IGST?
IGST is a tax levied on all interstate and inter-state supplies of goods and services in India under the Goods and Services Tax (GST) regime. IGST is collected by the central government and then distributed to the state governments based on the place of consumption of the goods or services.
What could have led to the demand notice?
There are a few possible reasons why Infosys may have received the demand notice:
- The company may have failed to receive the export proceeds within the stipulated timelines, which could be due to a number of factors, such as delays in processing payments by overseas customers, currency fluctuations, or banking issues.
- The company may have misrepresented the value of the goods or services exported in its shipping documents.
- The company may have failed to pay IGST on the export proceeds, even though it was liable to do so.
What should Infosys do now?
Infosys will need to respond to the demand notice within the stipulated timeframe and pay the IGST, penalty, and interest charges. The company may also need to provide supporting documentation to the tax authorities to explain why it failed to receive the export proceeds within the stipulated timelines.
Impact on Infosys
The demand notice is unlikely to have a significant impact on Infosys’ financial performance. However, it does highlight the importance of compliance with tax regulations, especially for companies that are involved in international trade.
Conclusion
Infosys is a large and well-established company with a strong track record of compliance. However, the recent demand notice from the tax authorities serves as a reminder that even the largest companies are not immune to tax scrutiny. It is important for all businesses to ensure that they are in compliance with all applicable tax laws and regulations to avoid penalties and other adverse consequences.