LBT to Stay till GST is implemented

The BJP in Maharashtra had declared before the assembly elections in the state that Local Body Tax or LBT would be removed if they came to power in the state, however now it's clear that despite ·the BJP taking charge of the government it will not be removed. State finance minister Sudhir Mungantiwar said on Thursday that LBT will stay in Maharashtra till General Goods and Services Tax (GST) regime is introduced by the Centre. Traders in Maharashtra had launched several agitations against the Congress-NCP government in the state in the last one or two years to oppose LBT and specially the system of the collection of this tax.

In an earlier post, had already predicted that without GST, it will be difficult to withdraw LBT as govt needs to have a plan to generate revenue from other sources to compensate revenue loss from LBT withdrawal.

Traders even shut down markets and wholesale trades in major cities of the state on several occasions while opposing the LBT. As this became a political issue in the state, the BJP had promised traders associations that if it comes to power, LBT would be withdrawn.But the new BJP government in the state has now announced that the tax will stay at least till GST is introduced which is likely to happen in 2016.

To understand the reason for this, read - Understanding Revenue Neutrality. 

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LBT Problem top go in 15 days

Chief minister Devendra Fadnavis has assured traders that he will find an amicable solution to the tangle over local body tax (LBT) within a fortnight.

Newspaper clipping on 5th November, 2014

At a meeting with the traders  on Wednesday, Fadnavis said his government was committed towards ensuring a transparent taxation system for them.

According to president of the Federation of Association of Merchants (FAM), which had spearheaded the agitation against LBT, Fadnavis was very positive about resolving the issue.

The traders have been demanding that octroi as well as the LBT system be scrapped, and additional cess be collected instead, based on the sales tax collection.

The latest news suggests that LBT will be collected by imposing 20% Surcharge on VAT. But the corporations still are not confident about the move. I had discussed the reasons in my last week post - Solution to LBT Problem

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