Infosys could add Rs. 400 crore in incremental revenue over the third and fourth quarters of the 2016-17 fiscal as part of the Rs. 1,380 crore Goods and Services Tax Network (GSTN) project won by the company in September last year.
The IT major has reportedly started importing and installing the hardware required for the project. Payment for providing the hardware will be made to Infosys by GSTN, a not-for-profit entity owned by the Central and state governments entrusted with the technology administration of GST for the country.
"The payments (Rs.400 crore) will be based on various milestones set as per the agreement... payment for the hardware will be done between October and March depending on how the work progresses," GSTN Chairman Navin Kumar was quoted as saying by the Mint.
The hardware cost comes as a breather to India's second largest IT services exporter after the company lowered revenue guidance to 10.5-12 percent, which came under further pressure as Royal Bank of Scotland cancelled a key contract with Infosys. In dollar terms, the company posted a 4.1 percent sequential decline in net profit for the April-June quarter this year.
The $60 million (Rs. 400 crore) payment could lead to 1 percent growth in revenue in the upcoming quarters ending December and March, an added advantage during a lean season when technology companies see their incremental growth slump because of holiday season.
"Infosys is excited to be a part of the GST journey. We are working with GSTN and other government agencies towards implementing the system in a timely manner. We are in the development stage of the system," said an Infosys spokesperson.
Kumar told the newspaper that the government expects the beta version of the tax portal to be ready by February next year.
Typically, IT companies execute a government project under the build-own-operate-transfer (BOOT) model wherein the vendor spends money on readying the hardware and developing software which is earned back through user charges over the stipulated period of the project.
Infosys has already been paid around Rs. 150 crore for software services as per the terms of the five-year project, according to a company source cited by the newspaper. The remaining Rs. 800 crore for operations will be paid to the company by the government over the next five years.
Aside from subsuming indirect taxes such as the excise, VAT and service tax, the GST portal will have to migrate and store the existing details of the 65-70 lakh taxpayers in a database before the new tax regime can become functional.