Karnataka Government Steps In to Resolve Foxconn Property Tax Dispute
The Karnataka government has taken swift action to address a potentially damaging situation involving Taiwanese electronics manufacturing giant Foxconn. The intervention came after a local gram panchayat issued a notice demanding substantial pending property taxes from the multinational corporation, raising immediate concerns about the state's investment-friendly reputation.
Panchayat Notice Sparks Immediate Government Response
Koira gram panchayat in Devanahalli taluk, located near Bengaluru, served Foxconn with a formal notice dated January 7, seeking payment of Rs 12.7 lakh in outstanding property tax. The notice also demanded that the company submit various documents related to its manufacturing facility construction across two villages—Doddagollahalli and Aruvanahalli—covering an extensive area of 5.3 lakh square metres.
Interestingly, the panchayat's notice pointed out that official records still showed the land as vacant with no construction activity documented. "However, it has been found that construction of buildings have already happened and the unit has started functioning," the notice stated. It further requested Foxconn to submit building plan approvals and other verification documents within seven days of receiving the communication.
Special Investment Region Status Clarified
As soon as the notice became public, both the industries department and the rural development and panchayat raj departments moved quickly to contain the situation. The Karnataka Industries Area Development Board (KIADB) issued an order to the gram panchayat clarifying that Foxconn operates within a designated Special Investment Region (SIR).
According to SIR provisions, companies like Foxconn are answerable exclusively to KIADB regarding property and land-related matters, including property tax payments. The board's intervention established that local panchayats do not have direct jurisdiction over tax collection from SIR-designated entities.
Tax Distribution Mechanism Explained
The SIR framework includes a specific tax distribution mechanism designed to benefit both industrial development and local communities. Under this system:
- 70% of collected taxes are allocated for developing the surrounding industrial area
- 30% of taxes are transferred to the jurisdictional gram panchayat
In a significant development late Monday, KIADB directed Foxconn to deposit property tax for the 2025-2026 period through its newly launched web portal. The board also requested payment of any outstanding arrears for the 2024-2025 financial year.
Government Assures Proper Tax Flow to Local Bodies
IT-BT and Rural Development and Panchayat Raj Minister Priyank Kharge provided crucial clarification about the situation. "We have informed the zilla panchayat CEO that Foxconn has been identified as an SIR and KIADB will hand over 30% of taxes collected from the company to Koira panchayat," the minister stated.
KIADB has also dispatched formal letters to three gram panchayats—Koira GP, Bashethalli GP, and Vishwanathpura GP—under whose jurisdictions Foxconn and other companies operate. These communications aim to establish clear protocols for future tax-related matters involving SIR-designated enterprises.
The government's rapid response demonstrates Karnataka's commitment to maintaining a stable and predictable investment environment while ensuring local bodies receive their rightful share of revenue from industrial development. This balanced approach seeks to protect both investor confidence and community interests in the state's growing industrial landscape.
