Maharashtra budget: LBT scrapped, but consumers may pay for the losses

Traders in Maharashtra will not have to pay local body tax (LBT) after August 1, but to make up for the losses, consumers may have to pay more value added taxes.

Mumbai: Traders will not have to pay local body tax (LBT) after August 1, but to make up for the losses, consumers may have to pay more value added tax (VAT).

Chief minister Devendra Fadnavis said by scrapping the LBT, the government had fulfilled a poll promise. “We were bound to abolish LBT and even declared the date would be after August 1 this year. We will hike VAT,” the CM said.

The LBT will be abolished in 25 civic bodies, costing them Rs 6,875 crore.

“We are happy with the decision to remove LBT, but the move should have come in place by April. Why wait for another few months,” said Mohan Gurnani, president, Federation of Associations of Maharashtra (FAM), which spearheaded the agitation against LBT in 2014.

However, consumer activists said the government’s move follows pressure from traders’ lobbies. “Traders were not ready to maintain records. So they increased the pressure on the government and succeeded. Consumers will have to pay the price,” said Shirish Deshpande, chairman, Mumbai Grahak Panchayat.

The state’s move also came under the Opposition’s fire. “Any move to increase VAT will hurt people in the villages, as they will be forced to pay for those staying in the cities,” said Opposition leader Radhakrishna Vikhe Patil.