A Cognizant spokesman confirmed the report and said in a statement that a court has instructed the tax department not to take further action pending further hearings.
Cognizant failed to pay the tax of more than 25 billion rupees ($385 million) in the 2016-17 financial year, the Hindu reported, citing officials from the tax department.
Cognizant said it had paid all applicable taxes due on the transaction.
The company's accounts were frozen a week back and it had approached the High Court against the tax department, according to the report.
A Cognizant spokesman declined to give more details, while tax department officials could not be reached for comment outside regular business hours.
The U.S.-listed IT services has significant operations in India where the majority of its 260,000 employees reside.
(Reporting by Arjun Panchadar in Bengaluru; Editing by Shounak Dasgupta)