EVEN as the Central Government has emphasised on “One nation, one tax,” and made its intention clear to weed out multi-layered tax structure in the country while rolling out Goods and Services Tax (GST), some of the taxes especially concerning civic bodies, Maharashtra State Electricity Distribution Company Limited (MSEDCL) and railways will, however, continue to remain in existence. In civic bodies, only the local body tax (LBT), which is the main source of revenue for them, has ceased to exist from July 1, the day GST was rolled out.
In the last financial year, the Pune Municipal Corporation (PMC) collected Rs 1,500 crore as local body tax. Similarly, the Pimpri-Chinchwad Municipal Corporation (PCMC) collected Rs 1,400 crore LBT. With GST era taking off, LBT has been confined to the dustbin of history. However, this has posed the problem of revenue for the civic bodies which are looking at the state government to rescue them.
“The state government has promised to compensate the civic bodies for the loss of revenue through LBT. How it will be done remains to be seen. We are expecting that the state government will compensate us quarterly. We are awaiting the government word on this count,” said Pune Municipal Commissioner Kunal Kumar on Sunday.
While local body tax is gone, property tax, however, will continue to exist. Similarly, the “sky sign” tax and water tax will persist. Kumar said, “Yes, property tax will remain as it is.” PMC collected Rs 1,200 crore property tax last fiscal while the PCMC collected Rs 393 crore property tax. So far as “sky sign tax” is concerned, Kumar said, “It is not a tax but a rent collected for allotting the civic space to private bodies.”
PCMC joint municipal commissioner Dilip Gawde said people believe that civic bodies charge “water tax” which is not true. “The concept now is water charges. People are charged for using certain amount of water…,” he said.
Explaining the concept of GST, the PMC chief said, “The one nation, one tax theme is applicable to goods and services and not to duties, charges, rents or fees.” Kumar added, “In any transaction involving purchase and sale of goods and services, GST will be applicable.” He said GST was a gamechanger and has ushered in ease of doing business for people from different sectors.
“A trader from Madhya Pradesh who had to register in Maharashtra or pay the local tax will not have to pay double taxation or resort to multiple registrations. Their business has been simplified and made hassle-free. GST is a major booster for the economy,” he said.
Like the civic front, electricity duty or tax will continue to be charged from consumers by MSEDCL, the state power utility. State MSEDCL spokesperson P S Patil said, “Electricity duty will continue to remain in force. However, as for the new rates under GST, we will come to know only by Monday.” MSEDCL officials said electricity duty or tax is 16 per cent for residential consumers, 21 per cent commercial consumers and 9.30 per cent for industrial consumers.
Officials said the electricity duty is charged on consumption at the applicable rate per unit of electricity consumed. “If electricity consumption is higher, then a consumer gets a higher electricity duty.” After the GST, the state government will also continue to collect stamp duties and levies on petroleum products and alcohol which, officials said, will be a temporary arrangement.
On the railways front, the Centre will continue to collect terminal taxes on goods or passengers carried by the railway. Taxes on railway fares and freights will also remain applicable. In a statement, the Ministry of Railways said the Railways are conscious of the need to minimise burden on our passengers. “GST is restricted to 5% (in place of service tax of 4.5% levied earlier i.e. an increase of only 0.5%) for passengers travelling by rail only in first class and air-conditioned coaches.”
Similarly, GST on transport of goods by rail will be 5% (in place of service tax of 4.5% levied earlier i.e. an increase of only 0.5%) with exemption for essential goods like milk and agriculture produce, the railways said.