Infosys Coded India’s Tax Network. It Got a $4 Billion Bill

Software outsourcing from India took off after the Y2K scare of the late 1990s by steering a vast pool of cheap engineering talent toward programming. And because the industry earned dollars, it got to keep most of its profit. New Delhi’s tax bureaucracy couldn’t come up with a plan to slaughter the golden goose.

It’s never too late, however, to sharpen the knives. Take the notice last week to Infosys Ltd. for allegedly evading India’s goods and services tax, or GST, to the tune of 324 billion rupees ($4 billion) over five years. That’s its annual operating profit. Infosys said Wednesday it has paid all that it is legally required to — and even investors don’t believe that India’s second-largest software exporter needs to provide for the alleged liability. Infosys shares, the best performers on the benchmark Nifty 50 index over the past three months, have fallen 2.5% on the news.