No rollback of LBT in Maharashtra, says Chavan

A panel has already been formed to include traders' suggestions to make LBT implementaion hassle-free

Notwithstanding protest from opposition parties and traders, the Maharashtra government on Tuesday ruled out the possibility of a roll back of local body tax (LBT) which has been introduced in stages in 25 civic bodies excluding Mumbai from June 1. LBT replaces the controversial Octroi Duty.

Chavan's statement comes at a time when the government has appointed  a committee headed by the chief secretary to incorporate suggestions especially from traders to make LBT's implementation simple and hassle free.

In his reply to the calling attention motion moved by Shiv Sena legislators Rajan Vichare, Eknath Shinde and others in the state assembly, Chief Minister Prithviraj Chavan said the LBT is account-based and it will provide a much needed relief to traders from the payment of Octroi Duty  at check posts. LBT will promote transparency in financial transactions.

However, Shiv Sena and BJP made a strong case for the withdrawal of LBT. But Chavan reiterated that LBT will not be withdrawn. As far LBT's imposition in Mumbai, chief minister said there has not been any provision on its application in the Bombay Municipal Corporation Rules.

LBT will be imposed only after amendments to these rules and until then the Octro Duty regime will continue in the Mumbai civic body. Chavan had already announced that LBT introduction in Mumbai won't be possible from October 1.

Chavan said the government has introduced LBT after following due consultation process. He mentioned that it has been government's efforts to put in place simplified tax structure.

On opposition's  suggestion on an alternative method involving levy of a surcharge on VAT which is proposed to be collected within municipal limits, Chavan said  the revenues from such surcharge, collected by the State Sales Tax Department, would have to be routed through the State Budgetary process and the accruals therefrom would have to be passed on to the Municipal Corporations by way of grant.

This system would put an end to the financial autonomy of these bodies and completely destroy their ability to raise resources for their Projects through credit. This would be totally against the spirit of the 74th Amendment to the Constitution.