Bangalore: IT hardware and software dealers today (July 29, 2004) urged the Karnataka Government to roll back the hike in sales tax on IT products and services warning that it would encourage "grey market" operators affecting tax compliance and increasing corruption.

The dealers, under the banner of Association for Information Technology (AIT) took out a protest march in Bangalore and submitted a memorandum to Deputy Chief Minister Siddaramaiah demanding a roll back of increase in taxes.

AIT Secretary R Sridhar told reporters later that the tax hikes would affect the student community, besides IT spending by small and medium business in the State.

AIT president Dhananjay Collur cautioned that "existing IT hardware manufacturers and domestic software development units may move out to neighbouring states, resulting in large scale job losses and flight of investment."