Maharashtra is unlikely to scrap the Local Body Tax (LBT) unless the Goods and Services Tax (GST) is introduced by the Centre, the state government has said.
Though, the scrapping of LBT was featuring prominently in BJP’s poll manifesto for the recently concluded state Assembly elections.
“Yes, we did include scrapping of LBT and thereby bring cheer to traders in our poll manifesto. We remain committed towards fulfilling our promise. But at the same time how can we ignore the current financial condition of the state,” state Finance Minister Sudhir Mungantiwar told reporters on Wednesday evening.
He added that Maharashtra, which was once considered to be a financially sound state, is now reeling under a debt of Rs 3.44 lakh crore.
When the situation is so bad, shouldn’t it be priority (of the government) to improve the fiscal condition of the state, he added.
Traders across the state have been demanding to scrap the LBT for sometime and also held protests.
“We have the LBT and the Octroi which is providing revenue of Rs 14,500 crore to the exchequer annually. When we abolish these revenue sources, we need to find out an alternate source of revenue generation first,” Mr. Mungantiwar added.
He said the Centre is keen to implement the GST from 2016 and reimburse the state with the difference in the revenue once it is implemented here.
Chief Minister Devendra Fadnavis said, “Say if we manage to collect only Rs 8,000 crore from GST, the Centre will provide us with the remaining Rs 6,500 crore so that we get the same revenue as we currently get from octroi and LBT.”
“We have two options before us. Either we increase our tax collection by coming out with an alternative to LBT and octroi, or we wait for a year till GST will be introduced. I will explain the technical problems to the trade Union and try to convince them to wait for a year till we introduce GST,” he said.
Mr. Mungantiwar echoed Mr. Fadnavis’s views and said the state may consider postponing the scrapping of LBT and Octroi by a year.
Mr. Fadnavis has also called a meeting of traders today after which he may announce his decision on LBT.
