HC upholds Income Tax Department's view on taxing Infosys for onsite services

An old tax case has come back to haunt Infosys, the country's second-largest software company. In a ruling that backs the Income-Tax Department's claim of Rs 100 crore, the Karnataka High Court has upheld the view of tax authorities that the work carried out by Infosys for clients overseas, from 1992-93 to 1996-97, is in the nature of 'technical services'. The judgement could have implications for the subsequent years as well and lead to substantial tax claims on Infosys, with similar ramifications for some of the other software exporters. Indian software exporters such as Infosys send their employees overseas to work on client projects. In most cases, the employees work out of the client's premises. For a majority of Indian service providers, including Infosys, nearly half the revenue comes from work it does overseas, better known as onsite locations.

Source : Economic times