Bengaluru: IT giant Infosys Ltd has clarified that the services rendered by its overseas subsidiaries and clients for projects done abroad do not qualify as exports under India’s GST framework. The company mentioned this in a press release to the bourses, acknowledging that it erroneously claimed refunds for such transactions. The statement comes a day after the company was issued a Rs.415 crore show cause notice for ineligible input tax credit (ITC) refunds by the Directorate General of GST Intelligence (DGGI).
In a regulatory filing to the NSE, the company said that the DGGI had sought information about the GST refunds in May 2025 and issued a pre-show cause notice on July 30, 2025, for additional information/ relevant documents for the same. The DGGI then followed this with a show-cause notice for Rs. 415 crore on August 12, even as the company had sought time to respond and provide its answer.
According to the DGGI, Infosys filed multiple refund claims across several GST registrations for zero-rated goods and services that attract no tax on outward supplies. Companies can claim refunds on the amount spent on inputs, effectively making the supply chain tax-free. With Infosys generating nearly 97% of its revenues abroad, this could snowball into a significant challenge for the company, especially since it has admitted wrongdoing on its part.
According to the Economic Times, the show cause notice was sent after intelligence inputs suggested the company claimed tax credits for services that weren’t actually exported, according to Rule 89 of the CGST Rules, 2017 as well as Section 20 of the IGST Act, 2017.
The company is seeking advice from tax consultants and lawyers on the matter, and has also filed a writ petition in the Karnataka High Court challenging the legitimacy of the notice.
The company is doing all it can to resolve the matter amicably, and there shouldn’t be any material impact on the company’s operations.
