Infosys responds to Rs 415 cr show-cause notice on alleged ineligible ITC refunds

Infosys on Thursday clarified reports regarding a show-cause notice issued by the Directorate General of GST Intelligence (DGGI) for Rs 415 crore, related to alleged ineligible input tax credit (ITC) refunds.

In a clarification sought by stock exchanges NSE and BSE, the IT major informed that the matter dates back to May 2025, when DGGI sought information on GST refunds claimed by Infosys. The IT major said it had provided all relevant information and held discussions with DGGI officials to address the queries.

The DGGI had earlier issued a pre-show cause notice on July 30. Infosys requested additional time and documentation to respond, but the request was not granted. Consequently, the show-cause notice was issued on August 12 for Rs 414.88 crore, excluding interest and penalties.

The notice, Infosys said, alleges that services provided by the Bengaluru-based company's overseas branches do not qualify as export of services, and hence the refund claimed by the company is allegedly erroneous.

Infosys said it has assessed the notice and consulted external tax and legal advisors. Following this, the company filed a Writ Petition in the High Court of Karnataka on September 19, challenging the validity of the notice. Infosys clarified that there is no tax demand as of now.

The IT giant reiterated that it has always been compliant with central and state laws relating to GST refunds and stated that the media reports have no material impact on the Company. Infosys also confirmed that it will continue to submit all disclosures to the stock exchanges as per SEBI regulations.

At 11 am, the scrip was trading 0.24 per cent lower at Rs 1,491.30. IT as a pack was in focus on Thursday as India's largest IT software exporter Tata Consultancy Services (TCS) was scheduled to report its quarterly results. 

In the case of Infosys, Kotak Institutional Equities estimated the IT firm's Q2 revenue growth at 1.8 per cent QoQ. It anticipated stable EBIT margins and large-deal total contract value of $3 billion. The revenue guidance is expected to be revised to 2–3 per cent. Kotak said investor focus will remain on tariffs, discretionary demand, and GenAI.