The applicable Indian corporate statutory tax rate for fiscal 2025 is 25.17%, while for fiscal 2024 and 2023, it is 34.94% each.

Income tax expense for fiscal 2025, 2024 and 2023 includes provisions (net of reversals) of $16 million, reversals (net of provisions) of $113 million, and reversals (net of provisions) $13 million respectively. These reversals pertaining to prior periods are primarily on account of adjudication of certain disputed matters, upon filing of tax return and completion of assessments, across various jurisdictions.

During the year ending March 31, 2025, the Company received orders under section 250 of the Income Tax Act, 1961, from the Income Tax Authorities in India for the assessment years, 2016-17 and 2019-20. These orders confirmed the Company's position with respect to tax treatment of certain contentious matters. As a result, interest income (pre-tax) of $38 million was recognised and provision for income tax aggregating $21 million was reversed with a corresponding credit to the Statement of Profit and Loss. Also, upon resolution of the disputes, an amount aggregating to $125 million has been reduced from contingent liabilities.

During the year ending March 31, 2024, the Company received orders under sections 250 and 254 of the Income Tax Act, 1961, from the Income Tax Authorities in India for the assessment years, 2007-08 to 2015-16, 2017-18 and 2018-19. These orders confirmed the Company's position with respect to tax treatment of certain contentious matters. As a result, interest income (pre-tax) of $232 million along with the corresponding tax impact was recognized. Further a provision for income tax aggregating $63 million was reversed with a corresponding credit to the Statement of Profit and Loss. Also, an amount aggregating to $196 million has been reduced from contingent liabilities.

The foreign tax expense is due to income taxes payable overseas, principally in the United States. In India, the company has benefited from certain income tax incentives that the Government of India had provided for export of services from the SEZ units registered under the Special Economics Zones (SEZs) Act, 2005 in the prior years, SEZ units who began to provide services on or after April 1, 2005, are eligible for an income tax deduction of 100% of profits or gains derived from the export of services for the first five years beginning with the assessment year relevant to the previous year in which the SEZ unit begins to provide services and 50% of such profits or gains for a further five years. Up to 50% of such profits or gains is also available for a further five years subject to creation of a Special Economic Zone Re-investment Reserve out of the profit of the eligible SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of its business as per the provisions of the Income Tax Act, 1961 (Refer to Other Reserves under Note 2.15 Equity).

As a result of these tax incentives, a portion of the Company’s pre-tax income had not been subject to tax in recent years. These tax incentives resulted in a decrease in our income tax expense of $363 million and $362 million, for fiscal 2024 and 2023 respectively, compared to the tax amounts that we estimate we would have been required to pay if these incentives had not been available. The per share effect of these tax incentives computed based on both basic and diluted weighted average number of equity shares for each of fiscal 2024 and 2023 was $0.09.

The Taxation Laws (Amendment) Act, 2019 introduced section 115BAA which provides that a domestic company can elect a reduced rate of corporate tax of 22% plus surcharge of 10% and cess of 4% but without the ability to claim of certain deductions, including deduction for SEZ units under section 10AA of the Income Tax Act. For the fiscal 2025, our income tax expense has been recognized by applying the provision of section 115BAA of the Income Tax Act without claim of deduction for SEZ units under section 10AA of the Income Tax Act.

Deferred income tax for fiscal 2025, 2024 and 2023 substantially relates to origination and reversal of temporary differences.

Infosys is subject to a 15% Branch Profit Tax (BPT) in the U.S. to the extent its U.S. branch's net profit during the year is greater than the increase in the net assets of the U.S. branch during the year, computed in accordance with the Internal Revenue Code. As of March 31, 2025, Infosys' U.S. branch net assets amounted to approximately $907 million. As of March 31, 2025, the Company has a deferred tax liability for branch profit tax of $31 million (net of credits), as the Company estimates that these branch profits are expected to be distributed in the foreseeable future.

Deferred income tax liabilities have not been recognized on temporary differences amounting to $1,941 million and $1,292 million as of March 31, 2025, and March 31, 2024, respectively, associated with investments in subsidiaries and branches as the Company is able to control the timing of reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future. The Group majorly intends to repatriate earnings from subsidiaries and branches only to the extent these can be distributed in a tax-free manner.

Deferred income tax assets have not been recognized on accumulated losses of $538 million and $560 million as of March 31, 2025, and March 31, 2024, respectively, as it is probable that future taxable profit will be not available against which the unused tax losses can be utilized in the foreseeable future.

In assessing the realizability of deferred income tax assets, the management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, the management believes that the Group will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

The Company’s Advanced Pricing Arrangement (APA) with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.

As of March 31, 2025, claims against the Group not acknowledged as debts from the Income tax authorities amounted to $226 million (₹1,933 crore).

As of March 31, 2024, claims against the Group not acknowledged as debts from the Income tax authorities amounted to $335 million (₹2,794 crore).

The amount paid to statutory authorities against the tax claims amounted to $491 million (₹4,199 crore) and $1,048 million (₹8,743 crore) as of March 31, 2025 and March 31, 2024, respectively.

The claims against the Group primarily represent demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of issues of disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding of taxes, among others. These matters are pending before various Income Tax Authorities and the Management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Group's financial position and results of operations.