Octroi is a name of tax levied by local muncipal corporation to track the movement of goods and also recover some money for local development. Ulhasnagar Muncipal Corporation (UMC) has allocated this unit to private bodies since many years. Unfortunately these private bodies has become mode of harassment to local businessmen. As per the law 4% octroi should be paid on selected goods entering into the city, but many of the times prices of the goods are inflated by octroi collection units and businessmen are forced to pay more percentage of octroi. In today’s tough competitive world paying more money on raw material creates undue pressure on business operations.
Ulhasnagar is Industrial hub since the beginning, Such kind of octroi collection practices has forced many businessmen to shift their business to octroi free zones like Gujarat.
On the other hand Central Government has always assured there will be single taxation on commodities which will be termed as VAT (Value Added Tax) This will avoid same product being taxed multiple times till it reaches to the consumer. Even though VAT is operational, local authorities has not stopped such additional taxes.
Good News is Maharashtra government abolished octroi in Ulhasnagar on March 31, 2012. But as per the decision octroi will be replaced by a local body tax (LBT) system from April 1. There is no clarity on what will exactly LBT system have.
Sindhunagar Vyapari Association has expressed their joy about abolishing of age old octroi burden. They have also said that they will not allow any other system to be implemented as replacement of octroi.
Local Body Tax (LBT) system was implemented in some of the municipal corporations in Maharashtra like Kolhapur, Solapur and already being opposed byTrader community. Following the stir of the traders in Kolhapur and Solapur, the State in December last year appointed a committee headed by the finance principal secretary to reconsider the LBT or find an alternative to this tax. The committee which was to submit its report within a month has been given an extension till March end. Further LBT implementations in other municipals can be found on this link.