Mumbai civic body to get Rs650 crore as GST compensation
Mumbai city news: According to sources, state finance minister Sudhir Mungantiwar will hand over the cheque to BMC in the presence of Shiv Sena chief Uddhav Thackeray on July 5 at the headquarters.mumbai Updated: Jul 07, 2017 12:38 IST
The Brihanmumbai Municipal Corporation (BMC) will receive its first cheque of Rs650 crore on Wednesday, after the Goods and Services Tax (GST) came into effect.
According to sources, state finance minister Sudhir Mungantiwar will hand over the cheque to BMC in the presence of Shiv Sena chief Uddhav Thackeray on July 5 at the headquarters.
With the GST roll-out, the BMC, Asia's richest civic body, has lost out on revenue of Rs7,000 crore that it collects for octroi on an annual basis. BMC's ruling party Shiv Sena had earlier objected to the single-taxation system raising apprehension on the BMC losing its autonomy. However, the state government assured that all local bodies in the state will be compensated with a compounded increase of 8% annually in perpetuity.
A bill to the effect — the state goods and services tax (SGST) — was passed by the state government in May.
An official from the BMC said, "While a cheque is being presented for the first month of July, the next month's amount will be paid through a bank transfer. The state's act mandates that the money be transferred within a specific period every month. Even if it is not done, it will be debited by the banks in order to maintain the civic body's autonomy."
Octroi and property tax were BMC's two primary sources of revenue. While the State is compensating its losses, officials say it will BMC a month to get used to the new system. The official said that BMC used to get Rs 18 to Rs19 crore everyday, which helped it maintain liquidity with everyday payments. "Now instead of daily payments, this will be done once a month, which will require some changes in the system, but that is not going to delay any work," the official said.
This year, the BMC had set targets of Rs 1500 crores in the first three months of the financial year, which it surpassed by mid-June. The civic body has also started clearing octroi nakas in the city to put it to better use. There are plans to utilise the space as heavy vehicle terminals, which will decongest the city and create more parking space.