Infosys Ltd, India’s second-largest software services provider, is poised to receive a substantial tax refund amounting to Rs 6,329 crore from the income tax department. However, concurrently, the company faces a noteworthy tax liability of Rs 2,763 crore as per assessment orders.
In response to these developments, Infosys issued a statement to the exchanges, indicating its ongoing assessment of the implications of these orders on its financial statements for the quarter and fiscal year ending March 31, 2024.
The assessment orders, issued under various sections of the Income Tax Act, 1961, encompass refund claims inclusive of interest, spanning assessment years from 2007-08 to 2018-19. Conversely, the tax liability pertains to the assessment year 2022-23, encompassing interest charges. Additionally, for the assessment year 2011-12, Infosys faces a tax demand of Rs 4 crore, inclusive of interest.
In the fiscal year 2022-23, Infosys reported consolidated income tax expenses amounting to Rs 9,214 crore, marking an increase from Rs 7,964 crore recorded in the previous fiscal year.
In accordance with the company’s financial reporting practices, the income tax expense incurred by Infosys encompasses both current and deferred income tax components.
For the quarter ending in December, Infosys disclosed an income tax expense exceeding Rs 2,500 crore.
However, the ramifications of recent assessment orders issued by the income tax department extend beyond the parent company, affecting subsidiaries of Infosys as well. These assessment orders collectively stipulate a tax demand amounting to Rs 277 crore, inclusive of interest charges, spanning assessment years from 2018-19 to 2021-23.
Infosys, headquartered in Bengaluru, has asserted its commitment to thoroughly evaluating the implications of these orders on its financial statements. Furthermore, the company is actively considering the possibility of filing appeals against these orders, demonstrating its dedication to ensuring fair and transparent tax assessment processes.
Moreover, a specific unit within Infosys is anticipated to receive refund orders under various sections of the same law, totaling Rs 14 crore, for assessment years 2007-09 and 2016-17.
In its quarterly financial disclosures, Infosys underscores its adherence to accounting principles, emphasizing that current income tax liabilities for both current and preceding periods are recognized based on the expected amounts to be paid to, or recovered from, tax authorities. This recognition is carried out utilizing prevailing tax rates and laws that have been enacted or substantively enacted by the balance sheet date, ensuring compliance with regulatory requirements and maintaining transparency in financial reporting practices.