Friday, January 24, 2014

Sale of cars, bikes soar but LBT collection dips

If local body tax (LBT) collections are any indicator, less than hundred vehicles have been sold so far this financial year. Or that is the number of vehicles that dealers have paid LBT on to the civic body this year.

Consider this: Over 32,000 vehicles have been registered with RTO so far in Kolhapur this fiscal, but tax has been paid on only 95. Dealers are supposed to pay 1.5% of the total vehicle cost as LBT for vehicles that cost over one lakh. So, the number of vehicles that attract LBT comes to around 19,000, of which about 5,000 are estimated to be high-end bikes.

Reeling from poor collections, the standing committee has now sought from the RTO the number of vehicles sold over the last 10 months.

The civic body's LBT collection from vehicles is an abysmal Rs 14.05 lakh so far this year, way less than the Rs 69.68 lakh it made last financial year.

Sachin Chavan, chairman of the standing committee, told TOI, "The letter also appeals to the RTO that it should register the vehicle only after confirming that tax has been paid as it was found that most vehicles were sold in the city are not listed with the LBT department. We have warned LBT officers to take action against tax evaders."

The LBT department had, in its report to the standing committee (the copy of which is with TOI), revealed that only 117 vehicles have been listed with the department, of which tax on 95 has been paid.

Sanjay Sarnaik, chief accountant and LBT officer with KMC said, "We don't have any data regarding the number of vehicles sold in the city. We have requested to the RTO to provide the details of the number of vehicles registered with it during the current year. We will take action against dealers once we get the details."

The civic body's restlessness stems from the overall poor LBT collections this year. If in 2012-13, the KMC raked in Rs 74.65 crore through LBT, it is struggling to meet Rs 77 crore target for the current financial year. KMC has managed to generate just about Rs 63 crore from LBT so far this year.

Hence the focus on dealers evading tax. There are about 25 dealers for two wheelers and around eight dealers for four wheelers in the city. Around 18,300 two wheelers and 14, 656 four wheelers have been registered with RTO in the current fiscal.

Dealers have come up with ways to evade tax. They have their store houses at the Shiroli MIDC areas, and showrooms in the city. An RTO official, on the condition of anonymity said, "Since the tax is levied on vehicles sold within city limits, they are able to evade it. The vehicles are delivered from the warehouses outside the city and dealers claim that they do not come under the tax purview."

Officials are not off the mark. Pravin Shah, president of Kolhapur Dealers Association said, "The LBT is charged on the total vehicle cost and dealers are supposed to pay it tax to KMC. Often, vehicles are bought from the storehouses outside the city and customer registers the vehicle with the rural transport department to avoid LBT."

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