Tax Circular Dated 27.2.18

KARNATAKA GOVERNMENT
No RDP 481 GPA 2016
Secretariat of Government of Karnataka

Multi stored building,
Bangalore, Dated 27-02-2018
CIRCULAR
Subject : Guidelines for tax and fee on Industries and recovery action by Gram
Panchayath.
Ref : 1 .Govt circular no : RDP 939,GPA 2016(portion I) dated 19-11-2016

2. Govt order number: Rural Development and Panchayath Raj Department 481,
GPA 2016, dated 26-09-2017
3. Government letter number: Rural Development and Panchayath Raj Department
481 ,GPA 2016,dated 27-09-2017
4. Industrial Tax & Fee Reforms Committee report dated 5.2.2018
Karnataka Grama Sawaraj & Panchayath Raj Act 1993, Sec 199,199A and Schedule IV enable
Grama Panchayath to impose, revise and recover the Tax & Fee. In these cases, vide
reference No (1),circular issued wherein explained in detail to form the committee under the
presidency of Chief executive Officer of Zilla Panchayth to decide the fees to be levied on the
original value of the property and fee to be payable to grant the permission.
In spite of this, Government has received few complaints stating that certain Grama
panchyath not imposing Tax and Fee in accordance of procedure. Vide reference (2) of
Government order above, various industry associations have appealed to the government that
some Gram Panchayats have caused trouble to the industrialists by misinterpreting the
provisions of the Act and not levied the tax on Industrial building and vacant place in
accordance of law. Hence a committee formed under the Presidency of Sri M.K.Kempegowda,
Director (Panchayth Raj-1) Rural Development and Panchayath Raj Dept to examine all these
issues thoroughly and to recommend reformative action within the limitation of the Act. This
committee consists of officers from Industry and Commerce department and representatives
from the Association of Industrialists. Committee conducted various meeting, heard the
grievances of industrialists and submitted the report on 5.2.2018.
Committee report has been examined on behalf of Government,committee has given three
recommendations , few such recommendations are in the nature of bringing Amendment to
Karnataka Grama Swaraj and Panchayath Raj Act ,and also recommended to issue a circular
to bring reformative action without bringing any Amendment to the Act. By implementing
these recommendations, many of ambiguity between Industrialists and Grama Panchayath will
be resolved, by implementing these recommendations procedure of impose of Tax and Fee
from Grama Panchayath will be simplified, additionally it will increase the revenue Grama
Panchayath also. Consequently State Government feels that it encourage Governments’
industry friendly policy.
In the above background, the following guidelines have been issued for levy of tax,fee and
recovery procedure by the Gram Panchayats from Industrialists.
1. TOWARDS GRANTING PERMISSION/NO OBJECTION CERTIFICATE FOR INDUSTRIES OR

OTHER ENTITIES
As per Section 66 of Karnataka Panchayat Raj Act 1993, it is mandatory to obtain permission
from Grama Panchayath before establishment of all type industries, to obtain
permission,Industrialists shall provide following documents
1.
2.
3. NOC for Renewable Energy projects , Order issued by Energy dept shall be submitted
2. FEE TOWARDS PERMISSION/NOC
Fee towards establishment of Industrial unit & other entities will be determined based on
investment
(a)Micro scale Industries & other micro scale entities (within Rs 25 lakhs) : Rs 1000
(b) Small scale Industries &small scale entities (up to 5 Crores)- Rs 5000
(c ) Middle scale industries & middle scale entities(up to 10 crores) - Rs 10000
(d) Large scale Industries & other large scale entities (Rs 10 Crores to 50 Crores)- Rs 25000
(e) Above Rs 50 Crore Industries /entity, additionally for 1 Crores –Rs 5000
3. PROCEDURE FOR SUBMITTING THE APPLICATION FOR PERMISSION
1. Application shall be submitted in the prescribed format along with fee and
supporting documents directly to Panchayath or through online
2. Permission will be granted within 30 days from the date of receipt of application.
3. If permission not granted within 30 days without any sufficient reason, under such
circumstances , permission will be deemed to have been granted .
4. Once permission granted, no yearly renewal is required
5. If any Industries/entity already started without obtaining permission or

Industries/entity being under construction can submit their application along with
necessary details and applicable fee. Under such circumstances, Panchayath shall
grant post facto approval within 30 days
6.If Industries/entity spread over in more than one grama panchayath jurisdiction,
concerned Executive Officer shall act as Coordinating officer and shall do the needful
to get the permission
7. Above said procedure will apply for issue of No Objection Certificate
4. TAX ASSESSMENT PROCEDURE
1)
2) For vacant area land being used for Industrial purpose 0.05 %, for remaining vacant area
0.02 %
3) No Tax applicable for land reserved for Road, ornamental garden, environmental
protection/greenery
4) For renewable energy projects, Tax shall be assessed based on their power generation
capacity
a) For every 100 KW produced, Rs 500-00 annual Tax
b) For every 1000 KW (1 MW) produced Rs 5000-00 annual Tax
c)To determine the power generation , documents submitted by the company , which
means power sanctioned by the concerned department will be considered
5)If land is leased by the Department of Revenue/Forest/Muzarai and other Government

Department ,no tax shall be imposed on unused vacant land. For purchased land 0.02 % on
original value will be imposed as Tax on vacant land.
6) Publish pre-notification before assessing the Tax and suggestions /objections if any from
industries to be considered in accordance of procedure.
7. Existing system of evaluating the value of the industry building and Tax is unscientific, in
place of this value of the property and building mentioned in Balance sheet prepared by
Chartered Accountant being furnished by Industrialists to income Tax Dept and bank are more
authentic, necessary action can be taken to impose Tax based on the value mentioned in
these document .
5) PROCEDURE FOR RECOVERY OF TAX
1. Direct /online payment
2. Allowing for making the payment in installments (maximum 4 )
3.Entertain and all the payment from KIADB.KSSIDC,if they come forward to recover
Tax and make the payment.
4.If any disputes comes regarding determination Tax /Recovery of Tax , necessary
action to be taken in accordance of Sec 202 of Karnataka Grama Swaraj & Panchayat
Raj Act 1993.
Intimated to all Grama Panchayth to levy Tax & Fee to Industries in accordance of this
circular. Govt circular ref (2) regarding impose Tax on windmill, Solar project,Parks is hereby
recalled
Sd/-
M.K.Kempegowda
Director (Panchayth Raj-1)
Rural Development and Panchayath Raj Dept
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KARNATAKA GOVERNMENT

No RDP 481 GPA 2016

Secretariat of Government of Karnataka

Ref : 1 .Govt circular no : RDP 939,GPA 2016(portion I) dated 19-11-2016

1. TOWARDS GRANTING PERMISSION/NO OBJECTION CERTIFICATE FOR INDUSTRIES OR

2. FEE TOWARDS PERMISSION/NOC

(c ) Middle scale industries & middle scale entities(up to 10 crores) - Rs 10000

3. PROCEDURE FOR SUBMITTING THE APPLICATION FOR PERMISSION

4. Once permission granted, no yearly renewal is required

5. If any Industries/entity already started without obtaining permission or

7. Above said procedure will apply for issue of No Objection Certificate

4. TAX ASSESSMENT PROCEDURE

a) For every 100 KW produced, Rs 500-00 annual Tax

b) For every 1000 KW (1 MW) produced Rs 5000-00 annual Tax

5)If land is leased by the Department of Revenue/Forest/Muzarai and other Government

5) PROCEDURE FOR RECOVERY OF TAX

1. Direct /online payment

2. Allowing for making the payment in installments (maximum 4 )

Director (Panchayth Raj-1)

Rural Development and Panchayath Raj Dept

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