Udaipur IT Industry Confronts Double Taxation Threat from Municipal Body
The Udaipur Municipal Corporation (UMC) has issued notices to Information Technology (IT) industries operating within Rajasthan State Industrial Development and Investment Corporation (RIICO) industrial areas, directing them to deposit urban development (UD) tax. This move has triggered significant concerns among industry representatives regarding potential double taxation, as these units already pay service charges to RIICO for civic amenities and infrastructure.
Violation of Government Notification Sparks Industry Outcry
Industry leaders have pointed out that the additional demand for UD tax by the municipal corporation directly contradicts a 2010 notification issued by the Department of Local Bodies. This notification explicitly states that industries situated in RIICO-developed industrial areas, where service charges are paid to RIICO, should not be subjected to UD tax by local bodies. Despite this clear directive, the Nagar Nigam has warned of sealing industrial units if the UD tax is not deposited within the stipulated timeframe, according to a promoter of an IT company in Udaipur.
IT Sector's Industrial Status Ignored by Municipal Corporation
Compounding the issue, the promoter revealed that the Nagar Nigam does not recognize IT as an industry, treating it instead as a commercial activity. This stance persists despite both the Government of Rajasthan and the Union Government officially recognizing the IT sector as an industry. This misclassification has exacerbated tensions, as IT firms feel unfairly targeted by tax demands that should not apply under existing regulations.
Potential Impact on Udaipur's Emerging IT Hub
The municipal corporation's move has caused widespread concern within Udaipur's IT industry, which employs approximately 10,000 workers directly and indirectly. Industry associations fear that coercive actions, such as the sealing of units, could lead to:
- Disruption of daily operations and business continuity
- Potential job losses affecting thousands of employees
- Adverse effects on Udaipur's reputation as an emerging IT destination
Industry Calls for Government Intervention and Resolution
In response to the situation, industry bodies have urgently appealed to the Udaipur Municipal Corporation to immediately withdraw the notices and resolve the issue in accordance with the 2010 government notification. They have also called upon the State Government and the Department of Local Bodies to intervene, providing clarity to prevent further harassment of industries. The resolution of this dispute is critical to maintaining investor confidence and supporting the growth of Udaipur's technology sector.
