In an increasingly globalised economy, business activities extend beyond physical borders and traverse geographical boundaries, leading to varied tax implications due to outdated tax legislations that do not fully address these changes. In the service sector, tax obligations can arise even without traveling to different countries. A case in point is the recent incident of the revenue serving Infosys with a INR 32,403 crore (US$ 3.8 Billion) pre-show cause notice, which was later transferred to the Directorate General of GST Intelligence (“DGGI”) for further investigation. Prima facie, the tax assessment seemed not only excessive but also conceptually flawed, as it exceeded the annual profit declared by Infosys. The DGGI later withdrew the said notice. While the dust has settled on this high-stakes incident, the lessons may reverberate across India, particularly for multinational service providers. The questions raised during the investigation will have lasting significance and warrant consideration, extending beyond a single company or tax notice.Continue Reading Global Business, Local Tax: The Infosys GST Controversy and its Wider Implications