Maharashtra: 97% traders to get LBT relief from Aug 1
A new system is set to replace the local body tax (LBT), which will be scrapped from August 1.mumbai Updated: Jul 27, 2015 19:43 IST
A new system is set to replace the local body tax (LBT), which will be scrapped from August 1.
The Maharashtra government claimed around 97.7% of the traders will be exempted from local taxes, while only 50 big manufacturers and companies will continue to pay them. The ‘tax holiday’ offered to the traders, however, may not stay for long because the state is considering an ‘agriculture surcharge’ to be levied very soon.
The state government has almost finalised allowing 25 municipal corporations to collect stamp duty on real estate deals to make up for the LBT losses. The announcement is expected to be made in the legislature this week. The new option comes with an additional financial burden of around Rs 4,000 crore because the traders have to pay no local taxes till the Goods and Service Tax (GST) comes into force by April 1, 2016.
The scrapping, however, comes with a catch because traders with an annual turnover of Rs50 crore or more will not be entitled to an exemption from the LBT. “Only 50 manufacturers or companies have not been covered in the new system and I think this will be largely accepted by the trading community. We have decided to make the big players an exception because they would have otherwise enjoyed undue windfall,” said chief minister Devendra Fadnavis.
According to government sources, the manufacturers or the industries that are into the inter-state trading will continue to pay the LBT. “The limit of the annual turnover of Rs 50 crore is to ensure the burden of the tax on goods exported to other states is not put on the people of Maharashtra,” an officer from the finance department said.
Fadnavis also claimed though the government has made a budgetary allocation of Rs 2,098 crore to make up for the the LBT losses between August and December this year, the burden will be lesser than that.
Mohan Gurnani of the Federation of Associations of Manufacturers said though they are happy with the decision, it cannot be welcomed. “The traders dealing in inter region trade of petroleum products will have to pay the taxes. The government should have borne the burden which could have been just Rs 286 crore,” he said.