[May 20, 2013] Infosys to challenge latest tax demand of Rs.577 crore Tweet BANGALORE, May 20, 2013 (Mint - McClatchy-Tribune Information Services via COMTEX) -- Information technology (IT) industry lobby Nasscom said it will discuss with its members the tax demand issued against India's second largest software services exporter Infosys Ltd and take up the matter with the finance ministry, if necessary. On Monday, Infosys said it would file an appeal against the tax notice before the Commissioner of Income Tax, after it received a tax demand of Rs.577 crore for the 2009-10 fiscal year from the income tax department. Infosys said the tax demand did not take into account tax benefits on revenue earned from software development at onsite client locations and from special economic zones (SEZs), disregarding the clarification that had been issued by the Central Board of Direct Taxes (CBDT) in January. Nasscom said the country's software exports industry follows the guidelines that were issued by the finance ministry on the recommendations of the committee headed by former CBDT chairman N. Rangachary. The committee was set up last year by the government to review taxation policies that have a direct impact on software exporters and business process outsourcing companies. "We would reconfirm with our members that the CBDT circular clarifying all the issues are being followed both in letter and spirit in the field and provide the necessary feedback to the finance ministry to correct the situation," said Som Mittal, president of Nasscom, adding that the group did not know the specifics of the latest tax demand against Infosys. Mittal also said that Nasscom was still closing up tax assessments of the last four-five years for top companies. "It will be very unfortunate if the field is not taking cognizance of the circulars and guidance that CBDT has issued which are very clear. These guidelines were aimed to reduce litigations and create a positive business environment." Infosys also received a tax demand of Rs.450 crore in 2011 from the income tax authorities for allegedly claiming tax exemption for onshore software development. Over the years, other top Indian software exporters such as Tata Consultancy Services Ltd (TCS) and Wipro Ltd have also come under the scanner of the income tax department. In 2011, both TCS and Wipro were issued notices by the department for claiming benefits on onshore services. "The government introduced benefits under section 10A and 10B also under the SEZ scheme to boost software exports...recently the government has further liberalized the SEZ scheme which will increase employment, investment and foreign exchange earnings. The business model followed by the industry is simple and straightforward and there should be no denial of the benefits of incentives given under these schemes," Mittal said. ___ (c)2013 the Mint (New Delhi) Visit the Mint (New Delhi) at www.livemint.com Distributed by MCT Information Services [ Back To TMCnet.com's Homepage ]