India Likely to Reconsider $4 Billion Tax Demand on Infosys
After facing backlash from the IT giant Infosys and the software services industry, India is expected to retract its demand for Infosys to pay $4 billion in back taxes. The government had ordered Infosys to pay the additional amount, claiming that its overseas offices should pay goods and services tax dating back to 2017. However, the finance ministry now believes the notice goes against India’s tax principle of not taxing services exports.
Tax notices to foreign airlines operating in India, including Etihad and British Airways, are also likely to be revoked as the issue is similar. The GST Council is expected to make a formal decision on September 9. Infosys has been lobbying for relief, with industry groups calling for government intervention to prevent negative impacts on India’s ease of doing business.
This move follows recent decisions by the Indian government to avoid litigation and maintain ease of doing business, including easing a new property tax and addressing concerns over recruitment practices. The formal decision on the Infosys tax demand is expected soon.
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