Authorities have claimed tax on income earned by outsourcers from sending staff to work with clients abroad, or on-shore software development, the Economic Times reported on Monday.
Citing an unnamed tax official, the newspaper said the claim runs into billions of rupees and about 10 companies have been sent notices in the last one month.
It did not name any company, and the paper quoted the chief financial officer at a software firm as saying it was a technical issue and companies would appeal the notice.
Companies that have engaged in such activities under a separate subsidiary will not be impacted, the company official said.
Indian outsourcers currently pay no tax on the income they earn through the on-shore software development.
The tax department also wants software firms to reduce the expenses incurred in foreign exchange, in the form of per day allowance for employees sent abroad, from the total export revenue, the paper said.