28.3.13

Maharashtra set to scrap Octroi


Brihanmumbai Municipal Corporation (BMC) and some other municipal bodies in Maharashtra are now preparing to scrap the octroi tax collected at various entry points in the city and instead introduce a local body tax (LBT).
Chief minister Prithviraj Chavan announced in the assembly last week that several municipal corporations in the state will stop collecting octroi and shift to LBT, a move that’s likely to considerably ease traffic at all entry points in cities like Mumbai, Thane, Pune and Nagpur as trucks won’t have to halt at check posts for inspection and octroi payment.
Speaking in the state assembly, Chavan had said, “Over 20 municipal corporations have already introduced LBT and it’s working well. In Mumbai, Pune and some other municipal corporations, we will introduce the system so that all problems related to the collection of octroi can be removed. Traders will also find the system friendly.”
Local body tax is a tax that traders will have to pay on goods that they import to the city for trade. The idea behind introducing LBT is to remove the bottlenecks associated with the current method of collection of octroi duty and improving the speed of the goods movement.
Some traders from Pune and Nashik had filed a petition in the Bombay High Court challenging the introduction of LBT. The high court rejected the petition after several hearings and has now given its approval for its implementation in Mumbai, Pune, Thane, Nagpur and some other municipal corporations.
However, some political parties are still opposed to the new system. Shiv Sena and BJP, which rule the BMC, have objected to the change. But the civic administration is confident that barring initial problems of daily cash flow getting affected, LBT will earn more revenue than the current system. The reform will also boost the city’s businessfriendly image.
The state government is supporting the local body tax as it feels that this step will largely remove the rampant corruption of octroi at entry points. In the newly-introduced local body tax, a lump sum amount has to be paid by traders or manufacturers or owner of goods within the specified period.

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