Tax authorities may issue notices to some other IT companies for alleged tax evasion related to work done by their overseas offices, a report by news agency Reuters said on Thursday, a day after Infosys was slapped with a ₹32,403 crore GST notice.

IT industry body Nasscom on Thursday said the latest tax demand reflects a lack of understanding of the sector's operating model.

It also said multiple companies are facing avoidable litigation and uncertainty.

The Bengaluru-headquartered Infosys on Wednesday said Karnataka State GST authorities have issued a pre-show cause notice for the payment of GST of ₹32,403 crore for the period July 2017 to March 2022 towards the expenses incurred by overseas branch offices of Infosys Limited.

Infosys argued that GST payments are eligible for credit or refund against the export of IT services.

In a statement, Nasscom said that government circulars issued based on recommendations of the GST Council must be honoured in enforcement mechanisms so that notices do not create uncertainty and negatively impact perceptions on India's ease of doing business.

"Recent media reports of a GST demand of over ₹320 billion ( ₹32,403 crore) reflects a lack of understanding of the industry's operating model. This is an industry-wide issue, and multiple companies are facing avoidable litigation, uncertainty, and concerns from investors and customers," Nasscom said.

Nasscom argued that the GST enforcement authorities have been issuing notices for remittance by the Indian head office to its foreign branches for cases where there is no service between the head office and foreign branch for this RCM (reverse charge mechanism), ignoring that this is not a case of 'import of service' by the head office from the branch.

"This is not a new problem, and courts have been ruling in favour of the industry in these cases. This issue was even addressed during the erstwhile service tax law, where favourable judgments were delivered by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)," Nasscom said.

"Nasscom had requested the Ministry of Finance to issue a circular to clarify the position so that the industry can avoid this litigation risk. The Government and the GST Council have been supportive, and as a result, less than two months ago, a circular was issued exactly to address this issue," the IT industry body further said.