Complete relief to Infosys on reverse-charge GST likely
The Central Board of Indirect Taxes and Customs (CBIC) is considering modifying its June 26, 2024 circular, in what could pave the way for quashing the entire Goods and Service Tax liability of information technology giant Infosys for its business-as-usual fund transfers to overseas branches, according to an official source. The change would enable the expunging of the tax burden on the firm, and others who received similar notices, even in cases where “exempt services’ are involved, the source added.
The tax notices to the company in this respect under the reverse charge mechanism amounted to over Rs 30,000 crore for the period between 2017-18 and 2021-22.
The June circular allows the transaction value for the import of services between group companies to be considered ‘nil’, provided the recipient can fully avail the input tax credit. Hence, for supplies on which full ITC can be availed, no GST is levied.
However, this relief does not extend to situations where the services are used for exempted or non-GST supplies. In such cases, the recipient may not be able to claim the full ITC, as the GST law restricts credit on inputs and services used for making “exempt supplies”.
