Monday, 24 November 2014

Nagpur Govt abolishing LBT till replacement is found Good News for Businessman

Good News for Businessman: Govt abolishing LBT till replacement is found

NAGPUR/MUMBAI: In a clear admission that it cannot scrap the Local Body Tax (LBT) or octroi, chief minister Devendra Fadnavis on Thursday issued directives for an alternative to be found to the existing tax collection mechanism. This left local BJP leaders struggling to find ways to explain how the BJP was not going back on a major electoral promise.

Finance minister Sudhir Mungantiwar told newspersons that LBT could go only when the Goods and Services Tax (GST) regime came into force. A similar stand had been taken by former chief minister Prithviraj Chavan.

In a press release, the chief minister's office said the government was committed to scrapping LBT but cannot do so till an alternative revenue stream is found for various municipal corporations. Fadnavis held a meeting on Thursday with municipal commissioners from across the state at the Sahyadri state guesthouse to discuss the LBT issue.

Mitesh Modi, action-committee member, Federation of Associations of Maharashtra (FAM), said it seemed like a delaying tactic but traders were willing to give the new government reasonable time to find a solution. "We are in favour of the recommendation made by the Maharashtra Economic Development Council for a surcharge on the Value Added Tax (VAT). We will not offer any alternative solutions to the government. Let it come up with one that is favourable to traders,'' he said.

Alleging that the BJP stood exposed, former minister Nitin Raut told TOI the CM had failed to fulfil his commitment. "Fadnavis had assured on the floor of the house that they would abolish LBT immediately after government formation. But the BJP government will not abolish LBT as it is ruling at most of the municipal corporations. Revenue will be affected to a great extent if LBT and octroi are abolished. Civic bodies will have to adopt cess system, which would result in more revenue deficit. Our government also took the decision to abolish LBT, but could not implement it due to lack of alternative taxation system," he said.

Raut added that GST was a good option to replace LBT but there is no guarantee of its implementation by the central government. "UPA government had proposed to introduce GST but it was strongly opposed by BJP-ruled state governments," he said.

Raut also said the BJP government will also fail to fulfil the promise of separate statehood to Vidarbha. "There is a huge difference in making statements and implementing them," he said.

Mayor Pravin Datke said the BJP government has not said that LBT will continue till introduction of GST. "BJP is committed to abolish LBT. We will abolish it with the help of traders. Government said that more study is required to finalize new system in place of LBT. I will once again make a demand with the CM on behalf of the city," he said.

Accusing the BJP of forgetting its commitment, BSP group leader at NMC Kishor Gajbhiye said the government should immediately abolish LBT and also sanction compensation for revenue loss. "Revenue from LBT had just started to increase in the current fiscal. Traders stopped paying LBT after the BJP assured to abolish it. NMC is facing revenue loss of Rs 25 crore per month. Government should release Rs 25 crore per month to NMC," he said.

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