Friday, December 19, 2014

LBT Solutions More Draconian: Traders

No end in sight to local tax issue as alternatives  - turnover & entry tax cut no ice with biz-men Maharashtra Chief Minister Devendra Fadnavis' effort to find a compromise solution to the local body tax (LBT) seems to have again run into a wall with the traders' body showing little interest with the options offered by the new CM.

Fadnavis had said that his government would withdraw LBT soon and that a `solution' is in the `final stages' even as it held out two options -turnover tax and entry tax. Both options, however, failed to cut much ice with the traders.

Mohan Gurnani, president of the Federation of Associations of Maharashtra (FAM) that is negotiating with the state government on behalf of the traders’ body, said they were not happy with the options.

“The turnover tax is more draconian than LBT. For instance, under this, if a manufacturer sells a match box to a wholesale dealer, then he would have to pay a turnover tax, while the wholesaler would also have to pay a tax if he sells the match box to a semi-wholesale dealer, and the latter would have to pay the same tax if he sells it to a retailer. The retailer would also have to pay a turnover tax if he sells it to a customer. This would lead to a cascading effect on the prices and is not at all workable,” Gurnani claimed.

The traders are also opposed to the entry tax, which Gurnani claimed is just another form of octroi. “It’s basically an other form of octroi called the entry tax whereby goods coming in the jurisdiction of a municipal corporation or council limits have to pay tax. We oppose this as it is just another form of levying octroi which we have opposed,“ he added.

Gurnani said that they have come up with a counter proposal that includes paying a higher percentage through value added tax (VAT), but a state government official argued that they were not keen on this as the revenue earned through VAT would not be enough for municipal corporations to recover the amount that they would lose by abolishing LBT. Gurnani, however, said that the losses could be offset by VAT.

FAM representatives are scheduled to meet Fadnavis around December 26-27 to hammer out a compromise and discuss the proposals.

The traders’ body in the state have been on the war-path ever since the erstwhile Prithviraj Chavan government introduced the LBT since 2010. While the Chavan government did not relent to the demands made by the traders’ community, the latter decided to back the Sena-BJP combine that had promised to revoke the LBT if it came to power in the state.

Source : Dec 19 2014 : The Economic Times (Mumbai)