LBT to be abolished from August 1 for most traders in Maharashtra

MUMBAI: Maharashtra government today informed the Legislative Council that the controversial Local Body Tax ( LBT) would be abolished by August 1 for traders with a turnover of less than Rs 50 crore in 25 municipal corporations.

Revenue minister Eknath Khadse said the decision will give relief to 99.85 per cent of traders in Maharashtra and the government will provide financial aid to the municipal corporations which would lose revenue and may not mop up their expected income by the end of the year.

"In Thursday's cabinet meeting, the government decided to give relief from LBT to traders. We have also decided to provide financial aid to those corporations which do not generate intended income due to the abolition of LBT.

"The municipal corporations will also get the income generated from the stamp duty," Khadse added.

The minister said the state government will take into account 5-year average income of municipal corporations, and if the amount earned from the stamp duty is less than that of the peak annual income they will get the difference from the state government.

Finance minister Sudhir Mungantiwar said that in lieu of LBT, the government will impose surcharge on the Value Added Tax (VAT) till the Goods and Services Tax comes into effect.

LBT has replaced octroi, but trader community is opposed to it because of the paperwork it entails.

"Octroi will continue in the jurisdiction of Mumbai municipal corporation till GST is implemented," he added.

Chief Minister Devendra Fadnavis said in the Assembly that after scrapping LBT, the government will have to pay Rs 4,210 crore in grants for August 2015 to March 2016 period to municipal corporations (to make up their loss). The state had made a provision of Rs 2048.44 crore through supplementary demands for the first five months.

According to an official from the finance department, LBT collection from traders above the Rs 50-crore slab is expected to be Rs 10,568 crore.