Published On : Sat, Nov 22nd, 2014

Row over LBT deepens : Civic officials in a fix over shortfall in tax collection!

Representational Pic Nagpur: The civic authorities in Nagpur appears in a fix over Local Body Tax which have been bothering local traders for quite some time.  Many traders in the city had crossed their fingers and were hoping that the new BJP Government which had promised to do away with LBT the first thing they will do when they come to power. Many traders had also deferred to pay the LBT. With the State Government deciding to continue LBT till an alternate arrangement is arrived at, many traders now have to pay their LBT.

Nagpur Today spoke to the Assistant Commissioner (LBT) of Nagpur Municipal Corporation Milind Meshram who said there has not been a significant difference in the recovery of LBT. He claimed that the LBT for September received in October stood at Rs 21.93 Crores which significantly dropped to Rs 18.14 crore for the month of October, reflected in November. There is a shortfall of Rs 3.70 crores.

Octroi would have performed better

We have drawn an imaginative comparative data, based on the previous collections of Octroi when it existed. The comparative figure displayed in the graph shows the revenue collection by NMC (LBT) with an estimated growth rate of 17 per cent.


In the above figures, in the year 2013-2014 the Blue Column which depicts the Octroi collection (if Octroi still existed) would have been Rs 551 crores. Against that the Red Column which depicts LBT shows that the amount recovered was Rs 296 crores. In the year 2014-2015, the Octroi collection would have been Rs 644 crores, while the LBT collection was Rs 502 crores. The projected collection of Octroi would have been Rs 757 crores while the LBT collection would be Rs 550 Crores. However, the alternate revenue generation for the NMC suggested by a minister of BJP Government which is seriously considered by State Government shows that the revenue collection would amount only to a meager Rs 350 crores. What would NMC do to make up for the deficit is best known only to the officials concerned.

1% hike in Stamp Duty to compensate LBT?

Some of the sources among the trade and business community told Nagpur Today that when the Octroi was removed from the entire state, the government was well aware that the amount collected from LBT will be lower than the actual collection from Octroi. Therefore in order to make up for the deficit amount, the government decided to charge 1% additional with the existing amount as Stamp Duty to be levied on Transfer of Urban Property. Therefore all those who are opposing the LBT and are blaming law as being wrong, they should demand good governance and administration. Some of the businessmen claimed that non-collection of correct taxes is an administrative failure not wrong law.

GST cannot replace Local Body Taxes!

The one and only official paper on the Goods and Service Tax (GST) in India was released on November 10, 2009 by the then Finance Minister prepared by the Empowered Committee of State Finance Ministers.

According to the proposed GST model, the Central and State Taxes is to be subsumed under the GST.

The only taxes which will be subsumed under the GST are as under:

  1. VAT / Sales Tax
  2. Entertainment Tax (Unless levied by Local Body)
  3. Luxury Tax
  4. Tax on Lottery / Gambling / Betting
  5. State Cesses and Surcharges in so far as they relate to supply of Goods and Services

And the most important is

  1. Entry Tax, not in lieu of Octroi

However, No Local Taxes can be included in the GST.

–       By Samuel Gunasekharan