Infosys to contest 'arbitrary' Rs 457 crore taxation order: CFO
Infosys Technologies, will contest a Rs 457 crore ($100 million) tax claim from the nation’s authorities, saying it’s “highly arbitrary.”
“We got an order from the department,” CFO, V. Balakrishnan said in a telephone interview today. “We are going to contest it.”
Bangalore based software exporter, received the order in the first week of January, he said. Indian authorities asked the company to pay the amount, saying that the software exporter isn’t eligible to claim tax benefits for income generated by its employees working at clients’ sites overseas, a daily reported earlier today.
Indian software companies such as Infosys and bigger rival Tata Consultancy Services often post employees overseas as some clients ask for on-site staff to work as coordinators and provide technical support.
Tata Consultancy will watch for developments on the taxation issue, CFO, S. Mahalingam told Bloomberg UTV today.
Infosys gained 1.1 percent to Rs 3,304.90 at 9:57 a.m. in Mumbai trading, reversing earlier a decline of as much as 0.6 percent. Tata Consultancy rose as much as 4.2 percent.
“At a time when the industry is fighting for the global market, this kind of order is not good,” Balakrishnan said. The authorities looked at onsite software services “with a narrow viewpoint,” he said.
Infosys reported third-quarter profit of Rs 1780 crore on January 14, missing the Rs 1820 crore average of 27 analysts’ estimates compiled by Bloomberg. The company’s fourth- quarter forecast also lagged behind analysts’ estimates.
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