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The Indian tech giant Infosys has found itself embroiled in a major controversy after the Bengaluru GST office issued a staggering Rs 32,000 crore demand for unpaid Goods and Services Tax (GST). This development has sparked widespread concern and condemnation, particularly from former Infosys board member and Chief Financial Officer Mohandas Pai, who has vehemently denounced it as 'tax terrorism' at its worst.
Pai's condemnation stems from the fact that Infosys has consistently maintained a reputation as one of India's best-governed companies. The demand, alleged by the Directorate General of GST Intelligence (DGGI) to be for tax evasion related to integrated goods and service tax (IGST), has come as a shock to many. Infosys, in a statement to the stock exchange, has categorically refuted the claims, asserting that it has diligently paid all its GST dues and operates in full compliance with central and state regulations.
The situation has further escalated with Pai's call for immediate intervention from the Finance Ministry. He argues that such actions have the potential to severely impact India's investment climate and deter foreign companies from setting up shop in the country. He emphasizes that Indian software service companies have been major contributors to the Indian economy, generating a substantial portion of export revenues for over three decades. Pai further underscores that exports are specifically exempt from GST, making the tax demand appear baseless and unwarranted.
The former CFO's pointed criticism extends to the GST department, accusing certain officials of allowing their imaginations to run wild and engaging in harassment tactics against exporters by misinterpreting the law. He contends that this approach contradicts the government's stated goal of creating an 'ease of business' environment for companies in India. Pai has also urged the technology industry body Nasscom to step in and advocate for the industry, preventing further damage to the business landscape.
The implications of this situation are far-reaching, potentially impacting not only Infosys but also other multinational companies and Global Capability Centers operating in India. Pai's strong words highlight the critical need for a transparent and equitable tax system that fosters trust and confidence among businesses, both domestic and international.
Source: Tax terrorism at its worst: Former Infosys CFO Mohandas Pai slams Rs 32,000 cr GST demand to IT firm