BMC wants direct compensation from Centre for GST

MUMBAI: The Brihanmumbai Municipal Corporation (BMC), which stands to lose revenue of around Rs6,500 crore once the Goods and Services Tax (GST) comes into effect,

MUMBAI: The Brihanmumbai Municipal Corporation (BMC), which stands to lose revenue of around Rs6,500 crore once the Goods and Services Tax (GST) comes into effect, wants the Centre to give it direct compensation for this loss, without routing it through the state government.

HT Image

The BMC will write to the state government soon to approve direct funding by the central government, so that budgetary planning and routine BMC work is not affected. Civic officials said if the funds do not reach on time, then there will be a problem in conducting routine work, as the major source of their income, the octroi, will be abolished. “If the grant is given to us directly, then the state’s burden of managing and distributing the funds will reduce. We have discussed this with the state government and the response has been positive,” said a senior civic official, requesting anonymity.

The BMC, one of Asia’s richest civic bodies, is keen on maintaining its autonomy after the loss of octroi.

The civic body earns large sums through the octroi, which has not been set aside yet, even as the local body tax was introduced and later scrapped in all other civic bodies in the state.

The civic body is analysing alternative means to earn revenue after the GST is implemented, as the compensation amount to be paid has not been finalised. The civic body is studying the feasibility of increasing water taxes and revising property tax charges to see if additional income can be obtained.

It may also seriously look at levying solid waste management taxes, which have been in the planning stage for more than three years. It may implement a slum tax that was once cancelled by the political wing of the BMC.

However, with the all-important BMC elections slated for February 2017, a major hike will not be implemented until after.

A major cut will be imposed on the BMC’s routine expenses to cater to the loss of revenue, said officials.