The Brihanmumbai Municipal Corporation is employing a time tested formula to earn more revenue from diamond trade.
It is considering slashing octroi duty on diamonds to 0.01 per cent from the existing level of 2 per cent. The civic body is expecting its annual tax revenues to go up by Rs 10 crore if the octroi levy is reduced.
The proposal has come up following suggestions from the diamond and jewellery traders’ association in the city, which pointed out that many diamond traders were shifting to Surat where taxes were much less.
The civic administration has sent the proposal to Joint Municipal Commissioner SS Shinde for review. According to the original proposal, which was sent by the Gems and Jewellery Export Promotion Council, the rate of octroi on natural pearls, precious stones and articles was 2 per cent in 1993.
“Due to higher rate of tax, the importers were not willing to pay taxes and took every opportunity to avoid or evade the octroi,” said an official from octroi department.
Currently, the BMC earns Rs 2 crore every year. Diamond traders in the city are ready to pay octroi even on import articles, which is now octroi free.
Vasant Mehra, chairman of the council, said: “If the BMC reduces the rate of octroi to 0.01, it will benefit revenue. Also, it will help to stem the shift of the city’s diamond business to Gujarat, as there is no octroi there.”
NA Pathan, head of the octroi department, said: “We will implement the formula for a year on a pilot basis. If we don’t see expected revenues, we will revert to the current rate.”