Giving in to the demands of traders, CM Prithviraj Chavan Tuesday said the state was considering doing away with local body tax (LBT) and octroi and introduce a surcharge on Value Added Tax (VAT) instead.
Addressing the fourth edition of ‘Badalta Maharashtra’ (Changing Maharashtra) organized by Loksatta, a Marathi daily belonging to The Indian Express Group, on fast-tracking industrial development in Maharashtra, Chavan said the state government was considering a surcharge of 2.5-3 per cent on VAT.
“According to me, this is not an ideal solution, but if there is such a strong demand, we will have to consider it. There is likely to be political resistance. There is some opposition from the finance department. We will take a decision soon, while ensuring that finances of local bodies do not take a hit,” Chavan said.
While traders had suggested a surcharge of one per cent, Chavan said this would not be sufficient to cover the amount the local bodies were currently getting through octroi and local body tax. “From the surcharge collected, the state will pay a fixed amount to local bodies. Earlier, the funds used to go directly to the local bodies, but if this system is adopted, the collection will be through the state government,” Chavan said.