GST breather for Infosys: DGGI closes Rs 32,400 crore pre-showcause notice
Infosys said it had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022 on the issue of non-payment of IGST under the Reverse Charge Mechanism.
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The Print
4 hours ago
- The Print
Infosys gets huge relief on GST as DGGI closes Rs 32,400 cr pre-show cause notice
Mid-last year, the goods and services tax (GST) authorities had slapped Rs 32,403 crore notice on Infosys for services availed by the company from its overseas branches for five years starting 2017. New Delhi, Jun 7 (PTI) In a major relief for Infosys, the Director General of GST Intelligence has closed pre-show cause notice proceedings against the company for financial years 2018-19 to 2021-22 involving a staggering Rs 32,403 crore in GST dues. The GST demand, in fact, exceeds Infosys's annual profits (net profit for full FY25 stood at Rs 26,713 crore), and its closure now is bound to come as a significant relief for the tech major. The Bengaluru-headquartered company, in a BSE filing, said with the receipt of the latest communication from DGGI 'this matter stands closed'. 'In continuation to our earlier communications on July 31, 2024, August 1, 2024 and August 3,2024 on GST, this is to inform that the company has today received a communication from the Director General of GST Intelligence (DGGI) closing the pre-show cause notice proceedings for the financial years 2018-19 to 2021-22,' the company said in the filing late Friday evening. Infosys — which competes with the likes of TCS, Wipro and others for global IT contracts — said it had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022 on the issue of non-payment of IGST under Reverse Charge Mechanism. 'The GST amount as per the pre-show cause notice for this period was Rs 32,403 crore. The company had on August 3, 2024 received a communication from DGGI closing the pre-show cause notice proceedings for the financial year 2017-2018. With the receipt of today's communication from DGGI, this matter stands closed,' Infosys said. In July last year, Infosys had informed that Karnataka State GST authorities issued a pre-show cause notice for payment of GST of Rs 32,403 crores for the period July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys Ltd, and added that the company has responded to the pre-show cause notice. 'The company has also received a pre-show cause notice from Director General of GST Intelligence on the same matter and the company is in the process of responding to the same,' the filing of July 2024 had said. All along, Infosys maintained that GST is not applicable on these expenses. 'Additionally, as per a recent circular issued by the Central Board of Indirect Taxes and Customs on the recommendations of the GST Council, services provided by the overseas branches to Indian entity are not subject to GST,' Infosys had argued back in July 2024. The tech firm had asserted GST payments are eligible for credit or refund against export of IT services. 'Infosys has paid all its GST dues and is fully in compliance with the central and state regulations on this matter,' the company had contended. The document sent to Infosys by GST authorities at that point had reportedly said, 'In lieu of receipt of supplies from overseas branch offices, the company has paid consideration to the branch offices in the form of overseas branch expense. Hence, M/s Infosys Ltd, Bengaluru is liable to pay IGST under reverse charge mechanism on supplies received from branches located outside India to the tune of Rs 32,403.46 crores for the period 2017-18 (July 2017 onwards) to 2021-22.' The Directorate General of GST Intelligence in Bengaluru had been of the opinion that Infosys did not pay the Integrated-GST (IGST) on the import of services as a recipient of services. For the just-ended March quarter, Infosys reported an 11.7 per cent decline in consolidated net profit to Rs 7,033 crore mainly on account of compensation to employees, and acquisitions during the reported period. The company has guided for a revenue growth of 0-3 per cent in constant currency terms in the current fiscal year, citing uncertainty in the environment. For the full FY25, profits saw a marginal increase of 1.8 per cent to Rs 26,713 crore; revenues climbed 6.06 per cent to reach Rs 1,62,990 crore — exceeding its guidance of 4.5-5 per cent for the full FY25. PTI MBI TRB This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
News18
8 hours ago
- News18
Infosys Offers Cash Rewards For Senior Staff Conducting Lateral Hire Interviews
Last Updated: Infosys has introduced a cash reward policy for senior employees conducting lateral hiring interviews, offering 700 points per interview. Infosys, India's second largest software company, has rolled out a new cash reward policy for senior employees who participate in interviews for lateral hiring, aimed at enhancing employee morale. Under this scheme, employees will earn 700 points (equivalent to Rs 700) for each interview they conduct. They can also claim incentives for interviews conducted over the past five months, as the program is effective from January 1, sources told ET. This is the first time Infosys has implemented such an incentive-driven initiative, according to ET report. However, the policy is limited to recruitment within India. The ET report states this move acknowledges the significant role employees play in the interview process, especially as the IT sector increasingly focuses on lateral hiring rather than campus recruitment. At Infosys, experienced tech professionals like track leads, architects, and project managers at job levels 5 and 6 (JL5 & JL6) typically conduct multiple rounds of interviews with candidates shortlisted by the talent acquisition team, before the candidates proceed to the HR round. IT giant Infosys discharged at least 195 trainees from a batch of 680 after they failed to pass internal assessment tests, according a report by MoneyControl citing company emails being reviewed by it. With the fresh exits, the total number of affected trainees have reached to 800 since February, marking the fourth round of exits. To support those affected, Infosys is providing free upskilling programs through NIIT and UpGrad. According to MoneyControl report, out of total affected trainees, 250 have enrolled in upskilling programme through Upgrad and NIIT and 150 trainees were registered for outplacement services. India's second-largest IT services company laid off approximately 240 employees on April. Previously, the firm had let go of over 300 trainees in February and an additional 30-35 in March. These layoffs are a response to the company's need to navigate a challenging demand environment. Infosys has projected a revenue growth of only 0 percent to 3 percent for the current fiscal year, highlighting ongoing uncertainty in its primary markets.
The Hindu
12 hours ago
- The Hindu
What is India's latest approach to localising EV manufacturing?
The story so far More than a year since it was announced, the Ministry of Heavy Industries Monday notified guidelines of the Scheme to Promote Manufacturing of Electric Passenger Cars in India. The scheme reduces existing duties on import of vehicles for overseas manufacturers from the present 70-100% to 15% subject to the maker meeting minimum requirements for investment and setting up facilities in the country. However, Union Minister H.D. Kumaraswamy indicating luxury EV maker Tesla's unwillingness to manufacture in India have prompted concerns about the promise of the scheme. Also Read | Centre notifies guidelines to boost electric car production What does the policy propose? At the centre of the notified policy is the provision to reduce customs duty on the import of ready-to-ship completely assembled electric four-wheelers to 15%. This would apply to all vehicles valued at $35,000 - circumscribing cost, insurance and freight (CIF) - for a period of five years. However, this would be subject to the manufacturer investing a minimum of ₹4,150 crore over the next three years. They would also be expected to build infrastructure and facilities to enable 25% of the overall manufacturing activity be undertaken domestically (domestic value addition, or DVA) within three years, and 50% within five years. MHI specifies that a maximum of 8,000 vehicles can be imported at the reduced duty rate in a year with no carrying over of unutilised limits. The maximum duty permitted to be foregone under the scheme has been capped at ₹6,484 crore. Broadly, the objective of the overall scheme is to find a midway point where affordability for a captive market is attained, whilst also recognising that import substitution would require a layered approach and a protracted timeline. MHI calculated that an imported vehicle valued at $35,000 (₹29.75 lakh) would now be liable to pay basic customs duty of ₹4.6 lakh at the reduced 15% rate compared to ₹20.8 lakhs at the erstwhile 70% rate. Therefore, combining with IGST levied at 5% on the resulting value, the total foregone duty amount to ₹17.2 lakh with the final landing cost coming to about ₹36 lakh. Now, in line with an initial investment of ₹4,150 crore and a foregone duty of ₹17.2 lakh for each vehicle, the maker would be allowed to import 24,155 units in total. EDITORIAL | Falling short: On India's EV journey But does this help our overall ecosystem? Shouvik Chakraborty, Assistant Research Professor at the Political Economy Research Institute at the University of Massachusetts Amherst (U.S.) argues that a domestic industrial policy aligned with a vision for future could be a step in the right direction. Although he holds the current policy would bode well for India only if there is sharing of technology with domestic automakers. Further, he observes, 'Countries these days are extremely cautious about transferring technology outside (to maintain their competitive advantage). In that light, India must not become a domestic hub for producing components of a vehicle.' Dinesh Abrol, adjunct faculty at the Transdisciplinary Research Cluster on Sustainable Studies at JNU in Delhi, observes that no foreign firm has ever helped build some other country's ecosystem. He attributed China and South Korea's ability to build manufacturing setups to their focus on skilling, research and development alongside undertaking innovation projects. 'This enabled conditions for a technology transfer and prompting companies to come and invest into the ecosystem,' he states. Essential to note, China as the leading manufacturer of EVs accounted for 70% of the global manufacturing in 2024. The other set of concerns relate to the potentially increased focus on four-wheeler EVs, and their probable impact on India's ambitions to achieve Net Zero by 2070. According to data compiled by the Federation of Automobile Dealers Association (FADA), EVs accounted for 7.8% of all vehicles sold in FY 2025. This was predominantly led by electric three-wheelers (at 57% in its category), followed by two-wheelers (6.1%), passenger vehicles (2.6%) and commercial vehicles (0.9%). Significantly, the International Energy Association (IEA) identified India as the world's largest market for electric three-wheelers in 2024. Sales grew about 20% YoY, it observed. Mr. Chakraborty emphasises that most Indians travel by public transport, and policies must also focus on building the same. 'Means of last mile connectivity, as bikes and shuttles, is also very important. It is not of much help if one has to walk few kilometres to avail public transport. This is not how we can fight climate change' he states. The final set of concerns relate to input costs. S&P Global Mobility observed in an analysis published March this year that high initial costs, typically 20-30% higher than ICE counterparts, coupled with India's reliance on imported components and batteries 'hinder' the growth of the EV sector. It held notwithstanding government efforts to promote localisation through varied policies, the rate was 'not increasing as expected'. DATA | Union Budget 2025: Allocation for electric mobility schemes rise by 20% What about our industrial ambitions in the EV space? Other than the impact on the ecosystem, concerns in the realm extend to costs and competitiveness. Reuters had reported in December 2023 about Tata Motors opposing Tesla's proposal to lower import duties. It had argued, according to the report, lowering duties would 'vitiate' the investment climate which was premised around expectations of the tax regime favouring locals remaining unchanged. The automaker had further held that India's EV players required more government support in the early growth stage of the industry. According to IEA's EV Outlook, domestic OEMs accounted for more than 80% of the electric cars produced domestically in 2024. Additionally, it attributed a less than 15% share of Chinese imports in the country's EV sales in 2024 to high import duties on EVs and the availability of locally made, affordable electric models. Thus, the lowering of duties prompt concerns about the potential impact (though not potentially from China) on domestic industries. According to Mr. Abrol, the policy is premised around foreign-capital and is export-focussed. He suggested the policy should instead be oriented toward building local ecosystem and spurring research and development alongside innovation. Mr. Abrol holds the lack of availability of skilled persons is due to the missing contribution of the public sector. Mr. Chakraborty further states, by nature western technologies in general are more capital-intensive than those in labour-intensive economies. 'Even if it is export-oriented, it will create jobs in an area,' he states, adding, 'However, the overall context needs to be considered in terms of how many jobs it is displacing, this is also considering that EVs have less conventional parts than a gasoline-powered vehicle.'
