Karnataka Budget: Tax on private buses may raise cost for tech firms, staff

HD Kumaraswamy’s proposed increase in levies on omnibuses and private service vehicles, as well as on diesel, are expected to raise transportation costs for information technology, manufacturing and services firms and their employees.

The JDS-Congress government has proposed a hike in taxes to fund waiver of farm sector debts. All major technology companies, including Infosys, TCS and Tech Mahindra, use private buses to pick up and drop employees. An estimated 4,000 private vehicles provide such transportation services every day.

Infosys, TCS, Tech Mahindra and Siemens are among the technology companies that use private buses.


“Investors are coming to Karnataka mainly because of its competitiveness. Transportation costs are a major head for any large company, and any increase in taxes will weaken us,” said KT Rajashekhara, MD at SRS Travels, a provider of transport services.

The budget, presented on Thursday, seeks to increase motor vehicle taxes for private service vehicles by 50%. A 50-seater bus, paying a tax of ?40,000 per quarter now, will have to pay ?20,000 more due to new taxes, a major transport operator said.

According to the annexure provided in the Budget, the increase in taxes is applicable to omnibuses and private-service vehicles held under lease agreement with industrial undertakings or companies for providing transport services to employees.

Any steep increase in transportation costs will only encourage employees to go back to their personal vehicles which will worsen the city’s traffic condition, said NSRama, CEO at Electronic City Industries Association (Elcia), which counts Infosys, TCS, Wipro, HP and Tech Mahindra, among its 100-plus members.

Any reduction in such services on account of costs might lead to unauthorised operators taking over their space and offering transport services without paying taxes, she added.

According to an industry executive, transportation costs, in most cases, are shared between companies and employees. If employees find the costs steep, they may use their two wheelers and cars defeating the purpose of many companies to reduce congestion on roads.