What is local body tax?

What is local body tax?, a photo by firoze shakir photographerno1 on Flickr.

Article courtesy DNA ...

Tuesday, May 7, 2013, 9:23 IST

What is LBT?

It’s a tax that traders will pay the local civic body for importing goods into the city. Sounds similar to octroi? Octroi, abolished in almost all municipalities in state, is paid every time a consignment enters the city, at octroi nakas. LBT attempts to speed up goods movement, stressing self-declaration of goods by traders who will maintain LBT accounts.

Does BMC charge LBT?

The BMC is yet to migrate from its octroi regime and has bought time till later this year. So how does the traders’ strike affect Mumbai? The trader community is protesting the imposition of LBT in neighbouring municipalities, and the impending imposition in Mumbai. Wholesale markets in Mumbai, Thane and Navi Mumbai have been affected for 11 days, a complete shutdown in some localities and sporadic protests elsewhere.

But why are they protesting if LBT is merely replacing octroi?

The traders’ contention is that octroi abolition and imposition of LBT simultaneously is a betrayal. With VAT in place across the country, a double-tax regime is not acceptable, they say. Prices of goods are affected by VAT as well as by state or municipality-level taxes.

Also, complying with various rules on self-declaration, record maintenance, account books, etc could be an added cost under the LBT regime. Government sources say tax evasion under the octroi regime was simpler, another reason traders are opposing LBT.

Have all Maharashtra municipalities imposed the tax?

Out of the 26 corporations, 24 have migrated to LBT. Mumbai and Nashik will do so later this year.

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