HYDERABAD: The Industrial Area Local Authority (IALA) in Madhapur has reportedly caused a loss of over ₹100 crore to the government by under-assessing property taxes, according to the Comptroller and Auditor General (CAG).
The Greater Hyderabad Municipal Corporation (GHMC) mandates that IALA levy property tax according to specific classifications and monthly rental values (MRV). In Madhapur, the MRV for industrial properties was set at ₹4 per square foot for ground and first floors, and ₹3.50 per square foot for upper floors. Meanwhile, office buildings had an MRV of ₹6 per square foot for the ground and first floors, with ₹5.50 for higher floors.
The CAG’s report noted that when taxing IT units, IALA applied the reduced MRV rates meant for industrial buildings. This misapplication led to an under-collection of property taxes amounting to ₹105.91 crore from 2014 to 2022.
In response to the report (October 2023), the government indicated that lower tax rates were agreed upon at the request of IT companies seeking to boost employment. However, other IALAs adhered to the classification and rates set by GHMC. It was acknowledged that property tax rates for IT companies would be raised starting April 1, 2023, based on the audit findings.
The report highlighted that IALA, Madhapur, provided undue financial benefits totaling ₹105.91 crore to its IT companies, contrary to established rules and without proper approval from the I& C Department or GHMC. The principal secretary of the I& C department directed an exploration of options to recover the ₹105.91 crore from the IT companies, as outlined in the CAG’s report presented to the assembly on Monday.
