Friday, September 26, 2014

Developments in September 2014

This is the list of what all developments happened around LBT in August 2014. I had started last month to post all LBT news updates on a monthly basis, were in one page get all news about Local Body Tax.

List of the news covered in this month news update
  • Nagpur Local Body Tax department conducts Search & Seizure
  • Navi Mumbai may lower LBT rate to flat 1.5% after election
  • TMC cracks the whip on LBT defaulters
  • Is Town Planning Department swallowing LBT revenue of NMC by ‘dirty deals’ with builders?
  • AMC not likely to execute new projects because of LBT woes
  • HC issues notices over scam in cold storages
  • 669 of the 739 traders found evading LBT at Nagpur
  • Govt ayes hike in local body tax on 4 items in Nagpur  
  • Ulhasnagar Municipal Corporation officer arrested for graft
  • Kolhapur Civic body seals bank a/cs of more than 500 traders over LBT 

Nagpur Local Body Tax department conducts Search & Seizure

Date : 25th September 2014
Local Body Tax department conducted Search & Seizure Operation at two establishments. 
The First dealer who has imported goods approximately worth Rs. 45 lacs since inception of LBT but did not pay single penny against an approximately estimated liability of Rs.1.7 lacs. As per LBT Rules, the dealer will now be required to pay penalty @ two times the LBT liability. The dealer has also not filed the annual returns for 2013-14. The second dealer has imported goods approximately worth Rs. 56 lacs since inception of LBT but has paid LBT Rs 10,000/- only. During the operation the Department has seized the relevant documents such as 4 files of purchase invoices. Department will investigate the matter & will initiate further appropriate actions.
Source : Nagpur Today, Times of India

Important Note:
Many dealers are importing goods and not making LBT payments on the pretext of news in local dailies that LBT will be scrapped. The dealers should take note that even if the LBT is scrapped it will be from the date of such notification by the Government. Therefore, the dealers are requested to pay LBT as per the rules on the goods imported till date to avoid action by the department.

Navi Mumbai may lower LBT rate to flat 1.5% after election

Date : 21st September 2014
After dilly-dallying, the Navi Mumbai Municipal Corporation (NMMC) has at last decided to reduce Local Body Tax (LBT) from 2% to 1.5%. The proposal got the approval at the recently held general body meeting of the NMMC.
As per the procedure, the GB-approved proposal now requires approval of the NMMC commissioner. Sources said that the commissioner has already forwarded the resolution, asking government to take the call. However, with the announcement of the state election schedule, the revised rate of LBT (if approved by the State government) will come into effect new government takes charge.
Traders were on war path since the LBT was implemented in NMMC jurisdiction on April 1, 2013. In the past financial year (2012-13), the NMMC had collected Rs 705.35 crore as cess/LBT against a target of Rs 700.77 crore.
In the first five months (April-August) of the current financial year, the civic body has collected Rs 314.09 crore as against the target of Rs 811.47 crore.
After announcement of elections, a notification giving effect to the resolution can be expected after new government takes charge. The present government is not in a position to take decision as the model code of conduct is in force. So Navi Mumbaikars will have to wait till election to Maharashtra assembly is over.

TMC cracks the whip on LBT defaulters

Date : 19th September 2014
The Thane Municipal Corporation (TMC) cracked the whip on local body tax (LBT) defaulters while conducting a raid on 18th Sept 2014. After facing a poor collection through LBT since April, the civic authorities started raiding shops and taking the defaulters to task. Action was taken after the traders were given a breather of almost a year as the community had complained to the urban development department of the TMC's highhandedness.
As many as eight shops near the station were raided. On Thursday, 12 officials led by deputy municipal commissioner and head of LBT department Dilip Dhole raided shops like Mickey Mouse, Surprise, Daksha Creation, Babita Saree Centre, Panchsheel Readymade and Hosiery, Karishma, Mickey Mouse Anex and G-Junction. At the time of going to the press, the officials were verifying the receipts and other documents.
Source : Times of India

Is Town Planning Department swallowing LBT revenue of NMC by ‘dirty deals’ with builders?

Date : 16th September 2014
The money mess in Nagpur Municipal Corporation (NMC) appears to be its own. The efforts of Municipal Commissioner to bail out the civic body from present financial crisis following enforcement of Local Body Tax (LBT) are going in vain. The NMC departments on which the top boss is banking to increase the much needed revenue are playing the spoilers and thus diluting his efforts. One such department is Town Planning Department. The Department is tacitly making NMC poorer and poorer and at the same time turning realtors or builders richer and richer. The Town Planning Department has been found not recovering the mandatory LBT at the time of sanctioning maps of dozens of buildings. The non-recovery of LBT by Town Planning Department, obviously with babu-builder nexus, is denting the NMC coffers in crores, according to revelations of a LBT raid.
It is pertinent to recall that recovery of LBT while sanctioning the building maps is mandatory in accordance with LBT Act. The rules say that the recovery of LBT varies in construction of buildings. For first three floors of a building, LBT at the rate of Rs 100 per sq mtr is levied, from fourth floor to seventh floor, the LBT is charged at the rate of Rs 150 per sq mtr and for above seventh floor a flat rate of Rs 200 per sq mtr has to be levied. However, it was awfully found that the Town Planning Department was recovering the LBT from a few realtors or builders and letting many others off the hook obviously for ‘bountiful’ reasons. The ‘dirty deals’ got exposed when LBT Department raided an under-construction mall being built by NMC on ‘BOT’ basis. Construction of the mall in Jaripatka is going on in full swing despite no recovery of LBT by the Town Planning Department while sanctioning maps of the mall and thus denting the NMC coffers in crores, revealed the raid.
Additional deputy municipal commissioner Pramod Bhusari has decided to conduct inquiry into the building plan sanction to Jaripatka shopping mall without recovering local body tax (LBT). He also warned of action against the erring engineers.
Source : Nagpur Today , Times of India

AMC not likely to execute new projects because of LBT woes

Date : 13th September 2014
Pointing out the poor financial condition of the civic body, Aurangabad municipal commissioner Prakash Mahajan expressed his inability to allot funds for new projects in a meeting at mayor Kala Oza's residence on Thursday evening.
Mahajan said that the Aurangabad Municipal Corporation (AMC) might not execute new projects in the current year, unless it consolidates its recovery and improves finances. Mahajan said that the AMC would carry on funding the water distribution and streetlight projects, but would have no room for taking up additional projects. "The current rate of revenue generation might not allow the civic body to take up projects earmarked in the annual budget. We may postpone some of the projects and put on hold some ongoing projects," Mahajan said.
Source : Times of India

HC issues notices over scam in cold storages

Date : 12th September 2014
A social worker has approached the judiciary, alleging illegalities by Nagpur Municipal Corporation (NMC) commissioner and his deputy in not taking action against four cold storages at Kalamna.
A division bench issued notices to respondents, including state urban development department secretary, Sales Tax and Income Tax commissioners, NMC chief fire officer, Local Body Tax (LBT) head, NMC assistant commissioner and NMC chief. They were asked to file replies within three weeks.
NMC officials had conducted raids on August 4 for evasion of LBT. Various commodities worth crores were seized, including spices and beetle nuts, along with documents, but no action has been taken till date.
The petitioner claimed that despite presence of incriminating material, the NMC authorities failed to take action or seize the cold storages under pressure from local politicians, resulting in loss of crores to the exchequer. He added that over 100 traders had stocked goods in these multi-storeyed cold storages.
Citing LBT rules, he said the traders have to register for LBT before bringing goods within the city limit and have to pay 2% LBT on dry fruits and spices and 0.2% on beetle nuts. In case they take goods out of the city, they have to pay 10% LBT within six months. He claimed that there was huge evasion of taxes and the NMC was bound to unearth them.

Source : Time of India

669 of the 739 traders found evading LBT at Nagpur

Date : 7th September 2014
The local body tax department of Nagpur Municipal Corporation (NMC) has found 699 of the 739 traders who had stocked their goods at four Kalamna-based cold storages not registered with it, thus, becoming liable to face action. Erring traders are set to face action for evasion as well as for not registering with the department.
Interestingly, the scale of action on five cold storages is much larger than what the department has done in the last one-and-a-half years since implementation of LBT. The department had taken action against 64 traders in 2013-14 and 44 in current fiscal which adds up to 108. In just four cold storages, 699 traders have become liable for action and the number may still go up.

Source : Times of India

Govt ayes hike in local body tax on 4 items in Nagpur

Date : 6th September 2014
For the first time since it came into effect, the local body tax (LBT) rates have gone up. On the basis a Nagpur Municipal Corporation (NMC) proposal, the state government has hiked the rates on saris, electronic goods, suitcases and bearings. Interestingly, the government did not approve hike in rates of alcohol and tobacco items despite request from the civic body.
Revision in LBT rates was proposed on corporation for 19 commodities. Government approved revision in four commodities.LBT on readymade items was 2% but rates on sari and cloth was 0.5%. Now rates on all readymade items including sari will be 2%.
The NMC's revenue from LBT would have increased satisfactorily had government approved the proposal to hike the LBT rates on alcohol, tobacco items and spirit. The government had reduced the rates on alcohol from 15% to 10% when it replaced octroi with LBT from April 1, 2013. Now, the NMC had proposed to hike rates on alcohol to 12% from 10%. But the proposal was not approved as 10% was the final cap.
Source : Times of India

Ulhasnagar Municipal Corporation officer arrested for graft

Date : 4th September 2014
A Class-I officer of the Ulhasnagar Municipal Corporation (UMC), who allegedly demanded and accepted a bribe of Rs 1 lakh was arrested by the Thane unit of the Anti-Corruption Bureau (ACB).
Superintendent of Police (ACB Thane) told that the arrested officer had originally made a demand of Rs 2 lakh for going soft on local body tax collection from an assessee, who complained to the ACB.
Source : Business Standard 

Kolhapur Civic body seals bank a/cs of more than 500 traders over LBT

Date : 4th September 2014
The Kolhapur Municipal Corporation (KMC) has sealed bank accounts of over 500 traders in the last few months for non-payment of Local Body Tax (LBT).
The traders' associations have remained firm on non-cooperation to the civic body and have appealed to traders not to pay the tax. However, association members expressed dissatisfaction about the state government request to civic bodies to choose between LBT and octroi. The state had also turned down the Federation Association of Maharashtra's (FAM) proposal to implement surcharge over Value Added Tax (VAT).
Source : Times of India