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Infosys vows to fight Indian tax claim

Domestic bill lands with a thud

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It’s not just Western technology giants that are being targeted by the Indian government, now local IT services behemoth Infosys has been forced to challenge a Rs.5.77 billion (£68.7m) tax demand by the authorities.

India’s second biggest outsourcer was hit with the tax bill for the 2009-10 year last month.

The demand relates to “tax benefits on income from onsite software development and revenue from SEZ [special economic zones in India], according to a statement sent to The Reg.

The firm is claiming that the tax demand ignores a clarification made by the authorities back in January, and added that it “is in the process of filing an appeal before the Commissioner of Income Tax”.

Infosys is already facing a hefty Rs11.8bn (£140m) bill for the four fiscal years preceding 2009-10.

The Indian government’s beef appears to be with the value of deductions the firm made. Expenses in foreign currency were apparently reduced from export turnover, but not reduced from total turnover, meaning Infosys effectively claimed too much in deductions from its tax bill over the period.

The company is by no means alone in being targeted by the tax authorities in India.

Nokia received a visit from the tax man back in January this year and was slapped with a Rs.13,000 crore (£1.5bn) bill for tax violations and transfer pricing irregularities.

Meanwhile, Google, which is under the microscrope in various countries around the world, received a Rs76 crore (£8.7m) fine in November last year for allegedly misleading the Indian government and violating accounting rules.

Vodafone has also been locked in a protracted battle with the authorities over £1.4bn worth of capital gains tax it is said to owe on its acquisition of Hutchison Essar back in 2007. ®

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