HYDERABAD: Industrial Area Local Authority (IALA), Madhapur, has caused a loss of over 100 crore to govt by under-assessing property taxes, according to the Comptroller and Auditor General (CAG).
As per Greater Hyderabad Municipal Corporation (GHMC) norms, IALA was required to levy property tax based on prescribed classifications and monthly rental values (MRV). In Madhapur, MRV for industrial buildings was fixed at 4 per square foot (sq ft) for ground and first floors and 3.50 per sq ft for upper floors, while office buildings attracted MRV rates of 6 per sq ft for ground and first floors and 5.50 for higher floors.
The CAG, however, observed that for levying property tax on the units that established IT offices, IALA, Madhapur, had applied the MRV rates as applicable to industrial buildings. Thus, the application of a lower MRV rate by IALA, Madhapur, resulted in a loss due to the short levy of property tax of 105.91 crore for the 2014-2022 period.
Govt replied (Oct 2023) that at the request of the IT companies for creating more employment generation, it was agreed to levy property tax at lower rates. But other IALAs continued to adopt the categorisation and rates as determined by GHMC. It was, however, stated that based on the audit objection, the property tax rates were enhanced as applicable to IT companies from April 1, 2023, onwards.
“It is clear from the reply that IALA, Madhapur, had extended undue benefit of 105.91 crore to its constituent IT companies as opposed to other IALAs that were covered under the jurisdiction of the same GHMC. IALA, Madhapur, took its own decision contrary to the rules and without obtaining any specific approval either from the I&C Department or GHMC. The principal secretary, I&C department, in the exit meeting directed to explore the possibility of recovery of 105.91 crore from the IT companies,” CAG pointed out in its report tabled in the assembly on Monday.
