FKCCI may approach Supreme Court on proposed tariff hikes

Bengaluru: Industry body FKCCI (Federation of Karnataka Chambers of Commerce and Industry) is planning to approach a higher bench of the Karnataka High Court or the Supreme Court if the Karnataka Electricity Regulatory Commission (KERC) does not rollback its proposed tariff hike of 36 paise per unit effective from April 1, 2025.

Additionally, the body will also protest against the state government's proposed 10 per cent lifetime road tax on electric vehicles (EVs) above Rs 25 lakh.

The current cost of electricity per unit for industrial consumers in Karnataka is around Rs. 6.90 per kWh. Reflecting the change, from April 1st it will be Rs. 7.26 per kWh. This surcharge will have a significant impact on industries, commercial establishments, and small businesses across the state, FKCCI President MG Balakrishna said at a press conference on Wednesday.

“The cumulative effect of successive tariff hikes in recent years has put undue financial pressure on Karnataka’s industrial sector, increasing operational costs and reducing competitiveness,” Balakrishna said.

The proposed tariff hike will escalate production costs, impacting Micro, Small and Medium Enterprises (MSMEs) the most, and industries may be forced to reduce their workforce or cut down on expansion plans due to higher overheads, he added.

BESCOM had recently submitted a multi-year tariff hike proposal to KERC seeking an increase of 67 paise per unit for 2025-26. The proposal was drafted based on the gradual increase in the consumption pattern in the post-Covid period in eight Bescom divisions. 

According to the BESCOM, power consumption of small-scale industries and other commercial sectors has grown over the years. Additionally, the number of residential consumers increases annually, triggering a spike in power consumption.

Regarding the proposals on property tax guidance values, the FKCCI plans to request the state government to consider taxation on the developed area on a square feet basis, as compared to percentage of tax on commercial sales.

Karnataka is proposing an increase in the guidance value will directly result in a rise in property tax, which will have an adverse impact on industrial and commercial property owners, as per industry experts.

Regarding the tax on EVs, Balakrishna stated that the FKCCI is against the proposal and plans to hold deliberations with the state government regarding this matter. 

The state has a lifetime tax on EVs exceeding Rs 25 lakh, which will be 10% of the vehicle’s cost and will be collected during registration. The previous tax rate was 4 per cent of the vehicle’s cost.