Traders' body calls for an open debate on LBT in Maharashtra
Moneylife Digital Team 10 May 2013

According to CAIT, traders have lost business of over Rs75,000 crore during the past two weeks of their strike. The government should come forward for an open debate on imposition of the LBT, the traders' body has demanded

Traders' body Confederation of All India Traders (CAIT) has called for an open debate on the merits and demerits of local body tax (LBT) that is being implemented in Maharashtra even as most shops across the state have remained closed today as well.
CAIT claimed that loss of business during the two-week long protest from traders and shopkeepers is estimated to be over Rs75,000 crore. To avoid more losses, the traders' body has called for an open debate on the merits and demerits of imposition of such a tax.
“The estimated business loss was over Rs75,000 crore causing a revenue loss of about Rs9,000 crore to the state government due to the strike,” the confederation said.
Wholesale and retail traders from Mumbai, Thane and Nagpur have been on an indefinite strike against LBT, stating the move will hurt their businesses badly.
Maharashtra is trying to replace the traditional octroi system with the new LBT. LBT is an account-based cess collection for every raw material used or imported into the city’s limits by all businesses, traders and manufacturers. In the newly introduced local body tax, a lump sum amount has to be paid by traders or manufacturers or owner of goods within the specified period.
CAIT said LBT suffers with various legal infirmities, ambiguities, confusions, disparities and anomalies. It will lead to double taxation on the same product, which is against the settled law of any taxation system.
“The basic principles of proposed Goods & Services Tax (GST) for which the Maharashtra government has already agreed, have been flouted even when the GST is not yet implemented. This amply shows that state government is inclined to play with the taxation system,” said BC Bhartia, national president of CAIT.
CAIT national secretary general Praveen Khandelwal questioned the jurisdiction of local bodies to enforce, collect and govern any accounting based tax, which has interpretation of law at each step. The municipal corporations and other civic bodies are not mandated to act as tax authorities. “Accounting based taxation system and interpretation of the taxation law, not being the core competence of municipal authorities, will result into greater harassment and victimization of traders,” he said.
According to Khandelwal under the proposed system, traders will have to keep record of all such entries and will have to file a return with the local self-government of the concerned city. This will lead to extra paper work whereas the traders are already subject to comply with large number of paper formalities under different acts, laws, rules and regulations, he claimed.
In Mumbai, which is the only city that charges octroi at 4%, LBT will come into effect from October, while other cities in the state have already gone the LBT way. 
8 years ago
Dear Mr Jaideep, the issue is not one of hiding income - as rightly stated, there is double taxation involved, no set-offs, and most importantly, we all know that once law is brought into force, it is never repealed - hence the association is right to be on strike. Why only Maharashtra politicians have the brains to bring in LBT and not anyone else - because for so many years, we have accepted the wrong practice of ZAKAT ( the Urdu word for OCTROI )! This is filling coffers of all parties and they have been enjoying and now they know that under GST they will not be able to get any more revenues.
8 years ago
Why didnt goverment recover losses of scam from corrupt politician instead of recovering LBT FROM Mumbai
8 years ago
LBT is a new tax and will involve huge expenditure to be incurred to administer it. New Dept. to be set up, whole army of staff to be appointed and all procedures to be undertaken :registrations, correspondence, returns, challans, notices,hearings, assessments, appeals etc. Thus, major part of revenue will be eaten away by exp. for administering it. It will only benefit the bureaucrats and increase corruption.
As an alternative, the Govt. can vary the rates of taxes, which are already in existence e.g. VAT to take care of revenue requirements.
Suiketu Shah
8 years ago
Big question is why is octroi and LPT only in Maharashtra(not in any other state in India).This itself proves the intention of the government and why the association is dead right in insisting it be abolished.
jaideep shirali
8 years ago
The excuses given by traders do not hide one attitude, which is that they make money but not want to pay tax on their actual income. The LBT move comes after reports for last 15 yrs have preferred an alternative to octroi. As for jurisdiction of local bodies to collect tax, is Mr Khandelwal ready to donate, along with his fellow traders, for each road/ gutter in this city ? Anyway, the traders have been misleading even their own on where LBT applies and where it does not. Let LBT come, the procedures can be modified once GST comes as well.
8 years ago
LBT is the last nail in the coffin of the businessman in Maharashtra - ask all the guys who are still trying to get the VAT audit completed for 2005-2006 which is already time barred ! The entire Maharashtra government machinery is following the footsteps of their political leaders - looto, looto, jitna ho sakta hai looto.

I know personally of 2 people who have wound up and relocated to Gujarat - and I wish I had joined them too !

The Maharashtra government seems to be thinking that real estate will be enough to keep its people fed ! When will they be proved wrong ? God only knows !
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