Infosys Breathes Easy After Rs 32,403 Crore GST Notice Closed. As Nilekani Backs India’s AI Future With Rs 70 Crore Grant; How India Is Steadily Building On Its AI Dream

In a major relief for India’s second-largest IT services company, Infosys has received official communication from the Directorate General of GST Intelligence (DGGI), effectively closing the Rs 32,403 crore GST demand notice issued last year.

Simultaneously, Infosys co-founder Nandan Nilekani has made headlines for a far more forward-looking reason –  committing a second multi-year grant to AI4Bharat, taking his total contribution to the IIT Madras-led initiative to a substantial Rs 70 crore.

Infosys GST Storm Blows Over
On Friday evening, Infosys informed the exchanges via a regulatory filing that it had received closure communication from DGGI regarding a pre-show cause notice for non-payment of GST under the reverse charge mechanism. This notice pertained to services imported from the company’s foreign branches during the period from July 2017 to March 2022 – a span that triggered scrutiny and led to what was then a staggering Rs 32,403 crore tax notice.

The magnitude of the demand had raised eyebrows across the corporate and investor community. To put it into perspective, the amount was equivalent to nearly 85% of the company’s revenue for the quarter ended June 30, FY25. Issued by the Karnataka State GST authorities in July 2023, the demand alleged that Infosys had failed to pay Integrated GST (IGST) on services rendered by its overseas branches to its Indian entity, classifying them as “distinct persons” under the IGST Act. These services, the DGGI had said, attracted reverse charge obligations.

Infosys, however, maintained that it had complied with all state and central tax regulations and promptly responded to the pre-show cause notice during July and August 2024. The closure communication received now puts the matter to rest, covering the financial years 2017–18 through 2021–22.

This resolution is a significant legal and reputational win for the Bengaluru-based IT behemoth, removing a looming regulatory cloud that could have had implications on investor sentiment and client confidence.

Nilekani Fuels AI4Bharat’s Expansion
While Infosys was busy closing a major tax chapter, its co-founder and tech visionary Nandan Nilekani was writing a new one, this time in India’s digital and AI journey.

Nilekani has committed a second multi-year grant to AI4Bharat, an open-source initiative based at IIT Madras focused on building foundational artificial intelligence models for Indian languages. This brings the total funding from Nilekani to Rs 70 crore. Though the specific amount and duration of the second tranche were not disclosed, the move builds on his initial support in 2022 that helped establish the Nilekani Centre at AI4Bharat.

The initiative has grown to become one of the most impactful efforts in India’s AI ecosystem, with its models now powering several national digital services. EkStep Foundation — Nilekani’s non-profit venture — said in a statement that AI4Bharat’s work aligns with the vision of making India the “AI use case capital of the world.”

Nilekani echoed this in his statement:“AI should be inclusive, not extractive. It should amplify every human being’s potential. That’s our vision of AI for the people—AI to make lives better, AI to amplify human potential.”

From voice-enabled UPI transactions in native languages enabled by NPCI, to regional translations of Supreme Court judgments via the SUVAS system, and real-time farming advice through chatbots like Kisan e-Mitra, AI4Bharat’s impact has already begun reshaping public digital services across governance, healthcare, agriculture, and finance.

The initiative has also played a crucial role in Bhashini, the national language platform under the government’s IndiaAI Mission, and has released language datasets in all 22 constitutionally recognized Indian languages as public goods. These resources are accessible through the AI4Bharat platform and India’s open-source AI repository, AIKosh.

Notably, Sarvam AI, the first startup chosen to build an indigenous foundation model under the Rs 10,000 crore IndiaAI Mission, has announced a collaborative research partnership with AI4Bharat indicating the project’s national strategic importance.

A Moment of Reflection
Together, the two developments showcase two sides of India Inc’s evolving story. On one hand, Infosys’ successful resolution of a complex tax dispute speaks to the challenges that large-scale global firms continue to face when operating across borders in India’s dynamic regulatory environment. On the other, Nilekani’s philanthropic push into inclusive AI innovation is a reminder of how India’s tech pioneers are now also nation builders, not just business leaders.

With regulatory hurdles cleared and visionary investments in India’s digital future deepening, Infosys and its co-founder Nilekani are sending a clear message: resilience and reinvention go hand in hand in today’s tech-driven India.

The Last Bit
India is rapidly positioning itself as a formidable force in the global artificial intelligence AI sector; with strategic investments, robust policy frameworks, and a focus on inclusivity, the nation is harnessing AI to drive economic growth, enhance public services, and bridge societal divides.

Looking at the strategic vision, launched in 2024, the National AI Mission aims to integrate AI across sectors such as healthcare, agriculture, education, and governance. The mission emphasizes building indigenous AI capabilities, fostering innovation, and ensuring ethical deployment of AI technologies.

Recognizing the need for a skilled workforce, India is also revamping its engineering curricula to include AI, cloud computing, and cybersecurity. Institutions are adopting experiential learning methods such as hackathons and industry collaborations to equip students with practical skills.

Additionally, partnerships like the one between Andhra Pradesh and NVIDIA aim to establish AI universities and provide AI training to thousands of students, fostering a new generation of AI professionals.

India’s AI ambitions are not confined to domestic advancements. Collaborations with global tech leaders and participation in international AI forums indicates its commitment to becoming a global AI hub. Strategic adoption of AI is projected to add $500 billion to India’s GDP by 2035, illustrating its potential to drive significant economic growth.

Despite the progress, India faces challenges such as inadequate computational infrastructure, regulatory gaps, and a shortage of AI researchers. Addressing these issues is crucial for sustaining growth and ensuring that AI benefits are equitably distributed across the population.

India’s AI journey is marked by a blend of ambition, inclusivity, and strategic planning. Hence, by focusing on indigenous development, skill enhancement, and global collaboration, India is laying the groundwork to become a leader in AI innovation and application.