Infosys faces tax heat on Kris Gopalakrishnans home turf, Chandy to firefight

Written by M Sarita Varma | Thiruvananthapuram | Updated: Jul 18 2012, 15:16pm hrs
IT major Infosys is on a collision course with the Thiruvananthapuram city top brass, on the home turf of its executive co-chairman Kris Gopalakrishnan. The CPM-run Thiruvananthapuram City corporation has threatened to initiate attachment procedures against Infosys, after the company officials refused to pay tax dues for its two buildings, on the outskirts of the state capital.

While the corporation warns of revenue proceedings in a week if the company is not ready to clear the building tax dues, Infosys's stand is that the company has been exempted from tax payment and that the demand is unjustified.

Infosys is the single largest software exporter from Kerala. Last year, when the aggregate software export volumes from Software Technology Parks of India (STPI) fell , Infosys was one of the very few firms that showed robust growth.

Infosys Thiruvananthapuram had clocked over 100% growth, a senior official of the company told FE. From R200.62 crore in 2010-2011, export revenues of the company's city unit had grown to R425.28 crore in 2011-2012. This was when about 200 units under Thiruvananthapuram STPI showed a slight drop in exports from R2,071 crore in 2010-2011 to R1,982 crore in 2011-2012. Infosys, according to officials, was brought to the Kerala capital, on promise of tax waiver incentives. It was the former chief minister and CPM's senior-most leader VS Achuthananthan, who laid the foundation stone for Infosys Campus in Thiruvananthapuram, two years ago.

The two buildings, according to Kris Gopalakrishnan, had eco-friendly certification, given by the Indian Green Congress. The main building is most energy efficient with a consumption of 3W per square feet and air conditioning of 500 square feet per tonne. One building is a 1,800-seater and the other a 2,500-seater.

Meanwhile, Thiruvananthapuram mayor K Chandrika insists that the company is yet to produce any valid government order that clarifies that it has exemption from building tax. "Unless the company clears the dues in a week, we have no option but to move to attachment procedures," says G H Kumar, Deputy Mayor, Thiruvananthapuram.

Sniffing business unrest over the tax notice on the country's pioneering IT firm, right on the eve of state's ambitious investment meet "Emerging KeralaGlobal Connect", chief minister Oommen Chandy has rushed his officials to firefight on the issue.

"We have been working on creating an amicable settlement in 24 hours," PH Kurian, principal secretary, IT, Kerala, said, when contacted.

The state IT ministry has been told to facilitate the documentation. Infosys officials are also not keen on keeping the tax default issue alive. Documents, detailing the building tax waiver, will be produced before the corporation officials within the week's deadline, they said.