It's a double-whammy for the IT industry. First, IT
companies were slapped with tax orders on employees who worked at client sites
overseas. And now, the Karnataka High Court has ruled that expenses incurred in
foreign currency, related to technical services rendered abroad, should be
deducted from the figures of export turnover and total turnover for computing
deduction. This pertains to a tax that has been paid by Infosys from 1993-94
through 1997-98, under section 80HHE of the I-T Act. It refers to providing
technical services outside India, in connection with development or production
of computer software. Now, the Karnataka High Court has ruled against Infosys
with the bench saying that Infosys is liable to pay tax for those services,
which have been provided abroad. Though there is no confirmation on the exact
amount which Infosys will be liable for, it could be in the region of about Rs
500 crore.
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