Infosys Cleared: ₹32,400 Crore GST Notice Dropped by DGGI in June 2025
📅 Posted on June 15, 2025 | By Rahul Kunwar
In a major development that grabbed headlines across India’s corporate and legal landscape, the ₹32,400 crore GST notice issued to Infosys in 2023 has officially been dropped by the Directorate General of GST Intelligence (DGGI) as of June 6, 2025.
📌 The Background
In 2023, Infosys received a pre-show cause notice under the GST regime, alleging that it had failed to pay Integrated GST (IGST) under the reverse charge mechanism (RCM). The services in question were sourced from Infosys’ own overseas branches for the financial years 2017-18 to 2021-22.
The notice—issued by the Karnataka State GST authorities and later handled centrally by DGGI—raised serious questions in the tax and legal community, especially regarding how intra-entity cross-border services are treated under GST.
✅ Clean Chit in 2025
Fast forward to June 2025, and the DGGI officially closed the proceedings. No penalty. No tax liability. No show cause notice.
This move has been seen as a vindication of Infosys' legal position, which was also endorsed by industry bodies like NASSCOM. The core argument was simple yet powerful: services received from foreign branches do not constitute a “supply” under GST law and hence do not attract RCM provisions.
🧠 Legal Perspective
This case hinged on one crucial interpretation:
Can a company receive taxable services from its own foreign branches?
Several prior rulings and the structure of GST law suggest ‘no’, and Infosys’ case rested on these precedents. The notice seemed to misapply the law, possibly due to aggressive enforcement interpretations.
💬 Was It Justified?
The closure of the notice leaves us with a lingering question:
Was the ₹32,400 Cr notice ever valid?
Or was it a case of regulatory overreach?
Some market observers even speculated whether such massive tax claims could be used to influence IT stock prices, given how sensitive the markets are to regulatory shocks. After the closure, Infosys stock gained modestly, reflecting investor relief.
📣 Final Thoughts
The Infosys-GST case is a landmark moment for Indian corporate taxation. It sends a strong message that tax enforcement must align with settled legal principles and international best practices, especially in a globally integrated service economy.
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