The Indian government is exploring ways to resolve tax disputes with major companies, including Infosys Ltd. and several foreign airlines, in an effort to maintain investor confidence and avoid potential legal battles. Authorities are considering accommodations after Infosys received a tax demand of ₹32,403 crore ($3.9 billion) for back taxes dating back to 2017, related to expenses from its overseas offices.
In addition, tax notices were issued to 10 foreign airlines, including British Airways. Analysts have expressed concern that these unexpected demands could negatively impact India’s efforts to attract investment from companies looking to move away from China and may reinforce the perception of India as a challenging business environment.
The Goods and Services Tax (GST) council is scheduled to meet on September 9 to discuss these notices. The government aims to resolve these disputes amicably to reduce litigation and improve the ease of doing business.
Finance Minister Nirmala Sitharaman has urged tax officials to use enforcement measures as a last resort and to encourage voluntary compliance. Critics argue that past tax disputes with foreign firms, such as Vodafone Group Plc, have harmed India’s investment climate. Infosys has contested the tax authorities’ demands, and the International Air Transport Association has called for an urgent resolution to the issue.
