Infosys Technologies Ltd on Tuesday said it will appeal an income tax department order demanding India's No. 2 software firm pay 4.57 billion rupees ($100 million) in tax for work done onshore.

In an email to Reuters, Infosys chief financial officer V. Balakrishnan termed the order arbitrary.

Earlier on Tuesday, The Economic Times reported that the tax authority, in the order issued a fortnight ago, refused to acknowledge onshore services as software exports, thus making them ineligible for tax benefits.

The tax demand is based on the assessment year 2007-08, the report said, adding similar demands could be raised for other years and other companies.

Onsite services, or work done abroad for a foreign client, account for more than 40 percent of the total earnings of software companies based in India.

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