Relief to Infosys on GST Demand Notice Likely Delayed
Date: December 20, 2024
Category: GST Recent News
Read Time: 4 Minutes
The resolution of Infosys’ ₹32,000 crore GST demand notice is likely to face delays. The GST law committee is still deliberating, and the issue is not included in the agenda for the GST Council meeting on December 21, 2024, according to sources familiar with the matter.
Infosys GST Notice: The Issue at Hand
In July 2024, Karnataka State GST authorities issued a pre-show cause notice to Infosys. The notice addressed expenses incurred by Infosys’ overseas branches between July 2017 and March 2022.
Authorities claimed that Infosys’ overseas branches failed to meet the criteria for claiming full input tax credit (ITC). This created complications in applying Circular 210, which governs ITC on services imported by related entities.
Although relief for Infosys is expected, the GST law committee’s ongoing discussions are delaying the resolution.
Updates on GST Clarifications
Food Delivery Apps
The GST Council plans to clarify the tax treatment of delivery charges by platforms like Zomato and Swiggy. These charges, considered part of a composite supply, will attract 5% GST without ITC.
This clarification applies retrospectively from 2022. Earlier notices by the Directorate General of GST Intelligence (DGGI) demanding 18% GST on delivery charges will no longer hold.
Sale of Old Vehicles
The GST Fitment Committee has proposed increasing GST rates on the sale of old cars from 12% to 18%. This aligns tax rates for old cars with those for larger vehicles and SUVs.
The rate hike also applies to the resale of electric vehicles (EVs) to address a tax anomaly. Authorities expect minimal revenue impact from this change.
Insights
The delay in resolving Infosys’ GST demand highlights the complexity of compliance for global corporations. Meanwhile, clarifications on food delivery charges and vehicle sales aim to ensure consistency and address interpretation issues.
