Published On : Fri, Jan 11th, 2013

LBT’s implementation may create more tax evaders in Nagpur, ‘Side income’ to increase

Nagpur News: The proposed Local Body Tax is gradually becoming a worrying sign for NMC as it doubts the new tax system would meet the same fate as that of income tax. The tax would then be recovered only against the receipts shown. If the Octroi department checks for the error then the evader may be in a position to ‘settle’ the matter with the senior officials.

State’s Chief Minister Prithviraj Chavan had directed to implement LBT in Nagpur Municipal Corporation from April 1, 2013. In case any political pressure comes, then the new tax may be put on hold for a while but the implementation seems to be certain.

Once the LBT comes into existence, the Octroi would be limited to check post. The result would affect NMC’s budget for 2013-14, which is expected to enlist less number of development works and more administrative expenses.

The functioning of both LBT and Income Tax Department has stark resemblance. As for income tax, the tax payer is liable to pay only for what is documented by him. Though the income tax sleuths often raid the commercial establishments but the action is restricted to few ‘big fish’ only. Sources revealed that if the offender is willing to shell out some ‘offerings’ then he is easily let off.  LBT would also be worked upon similar lines which could be harmful for NMC’s financial health.

Imposition of LBT may also increase the practice of financial behavior through temporary receipts. This would prompt the tax evaders to avoid working on fair bills and receipts. This would also hamper the net incomings from the Octroi naka where the goods without fair receipts are imposed with 10 times penalty. Currently, those not able to pay fine at Octroi end up losing their goods. Taxes would then be recovered through auctioning the seized goods. But LBT will largely affect the entire process, causing a great deal of revenue loss.

Sources suspect that the change in tax process would certainly benefit few officials and employees who will be ready to ‘settle the case’.