The Confederation of All India Traders (CAIT) today said the business loss of over Rs 75,000 crores has been estimated due to two-week long strike by Maharashtra traders against imposition of Local Body Tax (LBT). This amount is expected to mount further given the silence maintained by the state government on this burning issue. To avoid more losses to the economy, the Confederation has called for an open debate on the merits and demerits of imposition of such a tax.
“The estimated business loss was over Rs 75,000 crores causing a revenue loss of about Rs 9,000 crores 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.“The indefinite strike called by Maharashtra traders against LBT will further worsen the situation in the state. Therefore, we challenge the state government to join an open debate on any public platform on the so called advantages of the LBT. Let the people of the State & the Country know the real truth behind imposition of LBT,” CAIT said.
The Maharashtra government will implement LBT to replace the traditional octroi in its cities. In Mumbai, which is the only city that charges octroi at 4 per cent, LBT will come into effect from October, while other cities in the state have already gone the LBT way.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. LBT is an account-based cess collection and will be charged for every raw-material used or imported into the city limits by all businesses, traders and manufacturers.
The Confederation 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.Under LBT, the tax will not only be imposed on goods within the state but it will also be charged when goods will be transported from one city to another. Such a situation will usher into cascading effect resulting into steep increase in the prices which will bring more sufferings to the pockets of consumers, it said.While demanding immediate withdrawal of LBT, the CAIT National President Mr. B. C. Bhartia termed LBT as a tax which runs counter to the move of Union Government to implement a unified indirect taxation regime in the Country.“The basic principles of proposed Goods & Services Tax (GST) for which 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,” he said.He sought to know why the State Government is in a great haste to implement LBT and why it has not adopted a conciliatory approach so far in the wake of strike in different parts of Maharashtra since last more than a fortnight.
“The adamant attitude adopted by the State Government needs to be condemned in strong words which has thwarted the principles of democratic governance,” - added Mr. Bhartia.CAIT National Secretary General Mr.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 taxation law not being the core competence of Municipal Authorities will result into greater harassment and victimization of traders” - said Mr.Khandelwal.Both Mr. Bhartia and Mr. Khandelwal demanded Union Finance Minister and Union Urban Development Minister to immediately intervene in the matter and protect the distortion of taxation system at the hands of Maharashtra Government.