Industrial and manufacturing stakeholders in Mysuru have called on the Karnataka government to lower the property tax on industrial sites to make the businesses sustainable.
Members of the Mysore Industries’ Association (MIA) and similar organizations have also said that this will be a positive step in facilitating business transactions and improving the industrial and investment climate in the region.
It was pointed out that the Hootagalli City Council, which was constituted last year and which includes Mysuru’s main industrial areas, has enacted a tax rate that is believed to be the highest in Karnataka.
Former MLA Vasu, the president of MIA, said Hootagalli Gram Panchayat has been upgraded and Koorgalli, Hootagalli Village, Hebbal Industrial Zone, Belavadi and Hinkal have been incorporated into the new CMC. This is also Mysuru’s core industrial area, but the current tax plate promulgated by Hootagalli CMC was not only the highest in Karnataka, but also contradicted the state government’s policy of bringing a separate and lower tax plate for industries under the commercial plate.
While the fixed tax is ₹2 per square foot in the case of large industries, it is ₹1.50 per square foot for medium-sized units and ₹1 per square foot for small units. In contrast, the tax rate was ₹0.80 per square foot for commercial property and ₹0.50 per square foot for residential property, and the tax on industrial land is the highest in Karnataka, Mr Vasu said.
In addition, ₹4,000 per acre must be paid as a maintenance fee to the Karnataka Industrial Area Development Board (KIADB), in addition to a fee for construction plan approval by the KIADB and the local community.
A manufacturing unit in the area was billed over 40 lakhs in property taxes, including £96,192 as a beggar’s fee, £1.92 as a library fee, a health fee of 4.8 lakhs and a £64,128 transport fee from the Hootagalli CMC.
While local municipal corporations are quick to collect taxes, they do not provide the required services in proportion to the taxes collected. Therefore, according to stakeholders, industrial layouts remain without basic amenities.
Suresh Kumar Jain, Secretary-General of the MSME Council, said over £33m has been collected from industry in property taxes in the past six months, but local authorities have not spent a single rupee on infrastructure development.
Karnataka has announced a policy of having a separate panel for property tax for industries in urban local corporations at a rate lower than that for commercial properties. The chief minister proposed a separate basic tax panel for industries in the 2021-22 budget to encourage more industries, Mr Jain said.
As a result of several presentations by various industry associations, the state government proposed an industrial community agency with a one-window system for taxation, but it has yet to be implemented, Mr Vasu said.
Due to the Covid-19 pandemic, almost 30% of the industries have closed. The tax rate could affect the remaining units and have a negative impact on jobs and employment, Mr Jain said.