Infosys Share Price Dip 1% Amidst ₹32,000 Crore GST Evasion Challenge

Infosys stock declined by nearly 1% in early trading on August 1st after the IT giant received a GST notice alleging a substantial ₹32,000 crore tax evasion, which the company has denied. 

At 9:16 am IST, Infosys shares were trading at ₹1,850 on the NSE, continuing the previous day's 0.5% decrease.

Yesterday, Moneycontrol reported that the Directorate General of GST Intelligence claimed Infosys owes IGST under the reverse charge mechanism for supplies received from branches outside India, totaling ₹32,403.46 crores for the period from July 2017 to 2021-22.

In response, Infosys stated in a stock exchange filing that GST is not applicable to the expenses cited by the DGGI. The company affirmed it has paid all dues and is in full compliance with central and state regulations.

Additionally, Infosys clarified that the notice is a pre-show cause notice, with no formal demand made yet. The company must respond to the GST authorities to explain why the claim is unfounded, according to sources cited by CNBC TV18.

This significant tax claim comes as Infosys and other major Indian IT firms are beginning to recover from a slowdown in discretionary tech spending in key overseas markets.

To provide context, the demanded sum exceeds Infosys' annual net profit and is about a quarter of its quarterly revenue. For Q1 FY25, Infosys reported a 7.1% year-on-year increase in net profit to ₹6,368 crore and a 3.6% rise in revenue to ₹39,315 crore. The company also raised its revenue growth guidance for the financial year 2024-25 to 3-4%, surpassing market expectations.

Since January, Infosys share price has increased by over 20%, outperforming the NSE Nifty 50 index, which has risen about 15%.

Infosys Ltd, headquartered in Bengaluru, Karnataka, India, is a provider of technology-enabled business solutions. The company offers a variety of services including business consulting, outsourcing, and technology-related services such as enterprise agile DevOps, applied AI, API economy and microservices, application development and maintenance, application modernization, blockchain, cloud (Infosys Cobalt), data analytics and AI, and digital commerce.

Infosys' products and services are utilized in diverse industries including aerospace and defense, agriculture, automotive, communication services, healthcare, high technology, industrial manufacturing, information services and publishing, insurance, life sciences, logistics and distribution, media and entertainment, mining, public sector, retail, travel and hospitality, and utilities.

The company operates in North America, Europe, and other regions worldwide.