Infosys, India’s second-largest IT services firm, is grappling with a hefty ₹32,000-crore ($4 billion) tax demand from the Indian government. Despite the company’s efforts to negotiate, the authorities remain unmoved, insisting on full compliance with the Goods and Services Tax (GST) regulations.
A government source, speaking anonymously, confirmed that no leniency would be offered on the demand issued last month. Infosys is expected to respond within ten days after requesting an extension from the tax officials. This massive tax claim pertains to services from its overseas branches spanning July 2017 to the 2021-22 fiscal year—about 85% of the company’s revenue for the quarter ending June 30.
On August 3, Infosys updated stock exchanges, announcing that the ₹38.98 billion demand for the 2017-18 fiscal year had been resolved. The company asserts it has fulfilled all tax obligations and adheres to both central and state regulations.
Compounding its troubles, Infosys was fined CAD 134,822.38 (₹82 lakh) by the Canadian government in May 2024 for underpayment of the Employee Health Tax for the fiscal year ending December 31, 2020. The penalty was disclosed in a regulatory filing received from Canada’s Finance Ministry on May 9.
Market reactions have been notable. D.D. Sharma, vice-president at Anand Rathi Securities, remarked, ‘Infosys results just met market expectations, and with guidance already factored in, the stock is seeing profit booking. It had also surged significantly in previous sessions,’ as reported by Reuters.
The broader IT sector is also feeling the impact, with major players like Tata Consultancy Services and Satyam Computer Services witnessing significant declines in their stock prices.
