Maharashtra govt move on LBT sends civic bodies into a tailspin

Maharashtra govt move on LBT sends civic bodies into a tailspin

‘CM Fadnavis’s promise to compensate with stamp duty collection is hazy’

The state government’s decision to abolish collection of Local Body Tax (LBT) by 25 municipal corporations has created confusion and uncertainty about revenue sources for both Pune and Pimpri-Chinchwad municipal corporations. The chief minister’s announcement to compensate local bodies with stamp duty collection, civic officials said, is unclear as the state government is yet to come out with clear guidelines.

The abolition of LBT has been one of the major election planks of the BJP, and Chief Minister Devendra Fadnavis’s announcement Friday was seen as a step towards placating traders who had openly sided with the BJP prior to the elections.

In fact, a delay in abolition of the LBT had incensed the trader community, who had been raising their voice about the matter in the last few months. Lack of clarity in the matter was evident as the state government had delayed the decision to abolish LBT from April 1 to August 1.

Sources said the delay was due to lack of clarity about alternate source of income for the local bodies. The state government has now decided to exempt businesses with turnover of less than Rs 50 crore from the gambit of LBT.



Fadnavis announced that the state government would compensate the shortfall in revenue from stamp duty collections, but he did not come up with clear guidelines.

LBT for both PMC and PCMC has been contributing almost 10-15 per cent to the coffers. For the financial year 2015-16, targetted LBT collections for the PMC was to the tune of Rs 1,495.58 crore and for PCMC it was Rs 1,100 crore. Based on these collections, the budgets of both the civic bodies had projected development work, which Pune Mayor Dattatreya Dhankawade said might be difficult to fulfill. “Without ensuring an alternate source of revenue, the state government has stopped LBT. This has put the financial health of the PMC in question,” he said.

PCMC LBT department chief Yashwant Mane said they were yet to receive guidelines from the state government about alternate sources of revenue. “As per our collection, around 500 businesses will come under the gambit of LBT now. We are waiting for further directions from the government,” he said.

Dhankawade said he would speak with the government to ensure that revenue deficit was met at the earliest.

Meanwhile, BJP MLA Laxman Jagtap said a lot of opposition about the matter was based on unfounded facts. “For the PCMC, 90 per cent of the LBT collection was from just a handful of businesses and they will continue to remain under the gambit of the tax. The ones who have been exempted are small traders for whom LBT was a burden. Also, the state government will ensure the shortfall is met,” he said.