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In a major policy reversal, the Maharashtra Government on Wednesday decided to bring in the octroi as an alternative to Local Body Tax, in all the municipalities in the State.
Chief Minister Prithviraj Chavan told media persons after the Cabinet meeting that this decision was taken in view of the opposition to the Local Body Tax (LBT) from the traders. The municipalities, at their general body meeting, can pass a resolution and again choose octroi as a means for collecting taxes, he said.
The State Government, bowing to pressure from traders, in 2006 had replaced octroi with LBT in municipalities in the State, except in Mumbai city.
The traders, while bringing in goods into the municipal area, were regularly harassed at the octroi check points. Octroi was replaced with LBT but that was also not business-friendly. Therefore, they sought abolishing of LBT and levying of a surcharge on Value Added Tax, which could be paid back to the municipal authorities as taxes.
Chavan added that a committee of experts examined all aspects of replacing LBT with surcharge on VAT. But it is legally and operationally not feasible to levy such a surcharge, “Bringing octroi back into the systems is a retrograde step but today there is no other alternative,” he said.
He added that in a few months when the Goods and Service Tax (GST) regime is implemented across the country, the LBT and octroi will get subsumed in GST.
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