By Nikunj Ohri

NEW DELHI (Reuters) – The Indian government is not considering easing the tax demand it sent to Infosys last month, a government source said.

The tax demand is in line with the Goods and Services Tax rules and the country’s second-largest IT services company has asked for 10 days to submit its response after a meeting with tax officials, the source said.

The source declined to give his name because he was not authorized to speak to the media.

Shares of Infosys, which had risen 1.6 percent before the news was released amid a broader market rally, briefly pared their gains to about 0.3 percent after the news was released. They were last up 1.2 percent.

India has imposed a tax levy of over Rs 320 billion ($4 billion) on Infosys for services received from its overseas operations between July 2017 and 2021-22, representing 85% of the company’s revenue for the quarter ended June 30.

In a notification to the stock exchanges on August 3, the company said it had received notification that the demand for the financial year 2017-18 of Rs 389.8 crore had been met.

The company had previously stated that it had paid all its debts and was in compliance with all federal and state regulations.

India’s finance ministry and Infosys did not immediately respond to an emailed request for comment. (1 US dollar = 83.8725 Indian rupees)

(Reporting by Nikunj Ohri; Editing by Savio D’Souza and Varun HK)