Mumbai may lose around Rs.1,000 crore that it could have earned as revenue out of LBT that was proposed to replace octroi. The state cabinet on Wednesday formally gave full freedom to all municipal corporations to choose between LBT and Octroi. With the BMC administration favouring the existing system, Mumbai is all set to retain Octroi.
However, the octroi system has been a reason for traffic snarls as truckers block Mumbai’s entry points at nakas. Also, the system is not transparent and had scope for corruption, said experts. But the BMC’s contention is that unlike octroi, which earns revenue on daily basis, money would come from LBT only at end of every quarter. At present, the BMC earns around Rs.7,500 crore a year through Octroi. The earnings were expected to go up to around Rs.8,500 crore in an LBT regime.
Though thousands of traders had earlier demanded LBT, they opposed it later. Following which, the state proposed a third option—surcharge on value-added tax (VAT). But, a state committee, led by Urban Development Department’s principal secretary Manukumar Shrivastav, ruled out the option, terming it not viable.
“Our committee has ruled out the VAT surcharge option. So we have left it to the corporations to choose between LBT and Octroi. While traders in Mumbai and the BMC want to implement octroi, LBT has already been adopted by all other municipalities,” said chief minister Prithviraj Chavan said after the cabinet meeting on Wednesday.
LBT is the tax imposed by local municipal bodies on the entry of goods into a local area for consumption, use or sale therein. The state is projected to earn about Rs.14,000 crore through LBT in the current financial year. Its revenue from VAT, meanwhile, is reported to be close to Rs.60,000 crore.
The 25 municipal corporations that have adopted LBT, including civic bodies in Thane, Navi Mumbai, Pune, Nashik, and Aurangabad, are showing better results in terms of revenue and transparency, said a source.
However, the octroi system has been a reason for traffic snarls as truckers block Mumbai’s entry points at nakas. Also, the system is not transparent and had scope for corruption, said experts. But the BMC’s contention is that unlike octroi, which earns revenue on daily basis, money would come from LBT only at end of every quarter. At present, the BMC earns around Rs.7,500 crore a year through Octroi. The earnings were expected to go up to around Rs.8,500 crore in an LBT regime.
Though thousands of traders had earlier demanded LBT, they opposed it later. Following which, the state proposed a third option—surcharge on value-added tax (VAT). But, a state committee, led by Urban Development Department’s principal secretary Manukumar Shrivastav, ruled out the option, terming it not viable.
“Our committee has ruled out the VAT surcharge option. So we have left it to the corporations to choose between LBT and Octroi. While traders in Mumbai and the BMC want to implement octroi, LBT has already been adopted by all other municipalities,” said chief minister Prithviraj Chavan said after the cabinet meeting on Wednesday.
LBT is the tax imposed by local municipal bodies on the entry of goods into a local area for consumption, use or sale therein. The state is projected to earn about Rs.14,000 crore through LBT in the current financial year. Its revenue from VAT, meanwhile, is reported to be close to Rs.60,000 crore.
The 25 municipal corporations that have adopted LBT, including civic bodies in Thane, Navi Mumbai, Pune, Nashik, and Aurangabad, are showing better results in terms of revenue and transparency, said a source.
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