Infosys shares in focus amid Rs 32,403 crore GST demand notice; what IT firm says

Infosys Ltd shares are in focus today after the second-largest domestic IT firm received a pre-show cause notice from Karnataka State GST authorities for GST payment of Rs 32,403 crore for the July 2017-March 2022 period towards expenses incurred by Infosys' overseas branch offices.

In stock exchange filings, Infosys said it has responded to the pre-show cause notice. "Subsequent to the publication of the news articles, the company has also received a pre-show cause notice from Director General of GST Intelligence on the same matter and the company is in the process of responding to the same," Infosys said.

Infosys said it believes GST is not applicable on expenses incurred by overseas branch offices. Additionally, as per a recent circular issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, services provided by the overseas branches to Indian entity are not subject to GST, the Salil Parekh-led firm said.

Infosys said the GST payments are eligible for credit or refund against export of IT services, adding that it paid all its GST dues and is fully in compliance with the central and state regulations on the matter.

Infosys shares have rallied 17.5 per cent in the past one month. They are up 37 per cent in the past one year.

The IT firm reported better-than-expected Q1 results. With strong growth, optimistic commentary and upgraded guidance, the IT major's valuation gap with Tata Consultancy Services Ltd (TCS) should narrow going ahead, analysts said post its quarterly earnings. They suggested 'Buy' on the stock, citing strong recovery and attractive dividend yield of over 3 per cent.