Industry slams Maha allowing civic bodies to decide on Octroi, LBT

Terms it retrograde step leading to harassment of traders

Industry and trade bodies today criticized the Maharashtra government’s decision allowing civic bodies to choose between Octroi and Local Body Tax (LBT) and termed it as retrograde step which will further lead to harassment and increase in transaction cost.

Indian Merchant Chamber (IMC), which has been at the forefront to oppose Octroi since last three decades, has decided to soon convene a meeting of its members to decide future course of action.

Further, Federation of Associations of Maharashtra (FAM), which was spearheading agitation for the withdrawal of LBT, has convened meeting on August 19 to chalk out action plan against government decision.
 

 
State cabinet headed by chief minister Prithviraj Chavan on Wednesday had taken decision in this regard following strong opposition especially by traders to LBT regime which was introduced in phases since 2010.
 
IMC president Prabodh Thakker told Business Standard, "IMC is extremely disappointed with the stand that the state government has taken, leaving options to the municipalities. IMC has been against Octroi, which we inherited from British time. Maharashtra is the exception of continuing with system of levying Octroi. IMC urge the state government to reconsider its decision as it will add to corruption, loss of fuel, harassment to traders and would also fuel inflation.’’

 
Ramu Deora, former president, FIEO said the regime of Octroi and LBT are outdated which create substantial revenue leakage and harassment to the business and trading community.

"Export and import cargo are subject to check at the Octroi naka which increases the transaction cost and affect the international trade. Since now from April 1, 2015 GST is coming, all states should cooperate to accept the GST,’’ he noted.
 
FAM’s senior vice president Arun Doshi said trading community is not opposed to paying tax but wants simplified and corruption free system.

‘’Trading community is impressing upon this Government to abolish LBT and Octroi and subsume it with VAT. FAM will further intensify its agitation to press for the abolition of both Octroi and LBT,’’ he added.

 
Apart from traders, Congress and NCP ministers pressed for an alternate to LBT especially after the humiliating defeat in the Lok Sabha poll. Chavan had announced that the municipalities, at their general body meeting, can pass a resolution and again choose Octroi as a means for collecting taxes.
 
Traders had suggested levying of a surcharge on Value Added Tax, which could be paid back to the municipal authorities as taxes. However, Chavan added that a committee of experts examined all aspects of replacing LBT with surcharge on VAT.

But it was legally and operationally not feasible to levy such a surcharge. Except BrihanMumbai Municipal Corporation, the Octroi Duty has been abolished.