People protesting against LBT

Local Body Tax (LBT) in spite of facing a lot of protests against it is still not rolling back from Maharashtra, according to the state Chief Minister Prithviraj Chavan. While Maharashtra government on the other hand showed signs of taking back the LBT which was introduced in 25 civic bodies except Mumbai from June 1, 2013.

However, LBT will be implemented only after it follows certain rules and norms. Until then the Octroi regime will be followed in the state. LBT is to be implemented from October 1, 2013, which is not possible according to Mr. Chavan, especially in Mumbai.

People protesting against LBT
People protesting against LBT

Local Body Tax is a tax which trader will have to pay to the local Municipal Corporation for importing goods into a municipal corporation territory for sale or consumption. LBT will replace Octroi. Unlike the Octroi, where the vehicles which carry goods had to undergo physical checks at the toll booths; with LBT, that won’t happen. In fact, once LBT comes into picture, Octroi will be history. It is being pitched as similar to Octroi but some of the conditions and rules make it different which was the reason for the long merchant strike. At present, LBT on Semi finish and finished steel is charged @ 3%.

Traders argue that with VAT in place across the country, LBT will be like double-taxation. 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. Moreover, interference of local officers is a big bother for the traders.