BENGALURU: Infosys and the state government have locked horns over the latter’s tax demand notice on the houses the software firm built for those displaced by the heavy floods in Gulbarga district six years ago.
The demand, Infosys has said, goes against the spirit of the MoU the Infosys Foundation signed with the government in February 2010 when BS Yeddyurappa was the chief minister. Many corporates and business houses, including Infosys, responded to the government programme called “Aasare” (Shelter), the purpose of which was to provide relief to those affected by the floods. In the MoU, the government promised that there will be no tax liability on such transactions.
The Infosys Foundation, according to its chairperson Sudha Murty, built 2,300 houses in 2010 and handed over to the government. After the project was over, the government has been sending tax notices, she said. “We thought while we would build houses, the government would build roads. Instead of doing that, they are demanding taxes,” she said.
The Foundation, she said, responds positively to requests from governments, and has just concluded a 300-house project near Visakhapatnam in Andhra Pradesh at the request of Chief Minister N Chandrababu Naidu for those affected by the cyclone. “The Andhra government has not asked any taxes from us; or for that matter, any other state where we have handled projects,” Murty added.
Additional Chief Secretary to CM, DN Narasimha Raju said he will discuss with the finance department.
After the calamity , the Foundation spent Rs 30 crore plus to build these houses. The Commercial Taxes department issued notices to Mukab Builders, Gulbarga, demanding Rs 75 lakh in tax and penalties. The contractor has, in turn, passed on the claim to Infosys.
“It is unfortunate that the government has gone back on the promise it made in its MoU with us,” said Ramadas Kamath, executive vice-president, Infosys. Such actions will be a setback to philanthropic initiatives,” he said.
According to a government notification issued later, the contractor must first pay taxes and claim reimbursement from the government later. “How can the government issue such an order after signing the MoU? If that was their intention, why were we not informed at the time of MoU signing?” said Kamath.
Credits ET Realty