Infosys , one of India's leading IT services companies, is currently facing multiple regulatory challenges from tax authorities. The company has now received an additional penalty order from the Joint Commissioner of CGST, adding to its existing compliance issues with government authorities.

Latest CGST Penalty Order

Infosys has received a penalty communication from the Joint Commissioner of CGST on December 16, 2025. The penalty order details several alleged violations related to Input Tax Credit (ITC) practices spanning multiple financial years.

Nature of Alleged Violations

The penalty order cites multiple categories of alleged ITC-related contraventions during the specified period. The violations include disallowance of blocked ITC, excess ITC claims, wrong classification under tax heads, and invoices not reflected in Form 2A.

Previous Regulatory Actions

This latest penalty adds to Infosys's existing regulatory challenges. The company had previously received a show-cause notice amounting to Rs 4.15 billion from the Directorate General of GST Intelligence (DGGI) for suspected ineligible ITC refund claims. Additionally, the company faced a separate penalty of Rs 113.59 million from the Assistant Commissioner of Central Tax for alleged non-realization of export proceeds.

Company's Position

Infosys has stated in its regulatory filing that the latest penalty order does not have any material impact on the company's financials, operations, or other activities. The company has disclosed this information under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Regulatory Compliance Landscape

These multiple penalty orders highlight the increasing scrutiny on tax compliance practices in the Indian IT sector. The penalties span across different aspects of GST compliance, from ITC claims to export-related obligations, indicating comprehensive regulatory oversight of the company's tax practices.

Infosys and MIT Technology Review Insights have released a comprehensive global report revealing that psychological safety plays a critical role in driving successful AI initiatives across enterprises. The study, titled "Creating Psychological Safety in the AI Era," demonstrates that 83% of business leaders believe psychological safety directly impacts the success of their AI programs, highlighting the human factors that often determine technology adoption outcomes.

Key Research Findings on AI Success Factors

The report presents compelling evidence about the relationship between workplace culture and AI implementation success:

Current State of Psychological Safety in Organizations

The research reveals significant gaps in organizational readiness for AI transformation. Only 39% of respondents describe their current psychological safety level as high, while 48% report moderate levels. This disparity suggests many enterprises are pursuing AI adoption on cultural foundations that may not be fully stable, potentially undermining their technology investments.

Critical Barriers to AI Adoption

Despite major investments in AI technology, workplace fear remains one of the biggest obstacles to successful implementation. The study identifies several key challenges:

• Fear of failure: Nearly one-quarter of respondents admit hesitating to lead or suggest AI projects due to potential criticism
• Unclear communication: Employees often lack clarity about AI's realistic capabilities and limitations
• Limited leadership openness: Insufficient modeling of openness to questions, dissent, and failure

Solutions for Building AI-Ready Culture

The report emphasizes that creating psychological safety requires more than good intentions or standard HR policies. Organizations need explicit strategies:

Expert Perspectives on AI Transformation

Laurel Ruma, Global Editorial Director at MIT Technology Review Insights, emphasized that "psychological safety is not a soft metric, it is a measurable driver of AI outcomes." She noted that leaders who communicate clearly about AI's impact and model openness create essential conditions for innovation.

Rafee Tarafdar, Chief Technology Officer at Infosys, observed that successful enterprise AI transformations occur in organizations fostering psychological safety. "When employees feel empowered to experiment without fear of failure, innovation thrives," he stated, highlighting how trust and openness enable teams to unlock AI's full potential.

Sushanth Tharappan, Executive Vice President-HR at Infosys, reinforced that enterprises must pair technical investment with cultural transformation for lasting AI impact. He noted how psychological safety accelerates adoption when employees have safe spaces to experiment and reimagine their roles.

Strategic Implications for Enterprise AI

The report underscores that AI transformation encompasses both technological and cultural journeys. Organizations seeking to scale AI initiatives successfully must prioritize building trust, transparency, and safe-to-fail cultures alongside their technology deployments. This dual approach enables enterprises to create the psychological safety necessary for employees to fully engage with AI initiatives and drive meaningful business outcomes.