City devp work hampered as State reduces LBT subsidy

Friday, 7 September 2018

LBT was introduced by abolishing the old Octroi system from April 2013 in all municipal corporations except in Mumbai civic body.

PUNE: For year 2018-19, the Pune Municipal Corporation (PMC) has already projected a deficit budget of Rs 5,870 crore and after government’s decision to reduce Local Body Tax (LBT) subsidy, the corporation is likely to lose Rs 200 crore per year, which will directly affect the development work in the city. The corporation is already struggling for want of funds to carry out development work for newly merged 11 villages.

LBT was introduced by abolishing the old Octroi system from April 2013 in all municipal corporations except in Mumbai civic body. It was partially abolished in 2015 after strong protests by traders. On August 2015, the State government took a decision to charge LBT tax from traders having a turnover of more than Rs 50 crore. Earlier, it was imposed on traders having a turnover of Rs 5 lakh per year. 

After the decision, State government announced to give subsidy to corporations based on the earlier average Octroi collection, which was Rs 1,000 crore per year with a projected increase of 8 per cent per year. According to estimate, the corporation was to receive Rs 137 crore as monthly instalment.

However, the corporation is receiving only Rs 131 crore after subsidy was reduced by Rs 6 crore per month. According to the corporation’s Account’s Department, the civic body should get Rs 148 crore per month, considering 8 per cent hike as was assured by the government. It means that corporation will lose Rs 200 crore per year by the estimate. 

Tushar Daundkar, Revenue Officer of PMC, said, “We have already presented a deficit budget, as we have collected revenue of around Rs 4,100 crore as against total budget of Rs 5,870 crore. We are on the deficit side and after the State government has reduced subsidy of LBT, it will hamper the development work of the corporation.”

Another senior finance officer said, “We will lose Rs 200 crore per year and this is not a small amount. The amount is enough for the corporation to pay four months’ salary of employees. On the other hand, we can complete one development project with the amount.”   

Dnyaneshwar Molak, Deputy Commissioner, Local Body Tax, said, “State was giving Rs 137 crore per month as a subsidy but now, they have deposited Rs 131 crore as this month’s instalment. Actually, the State should increase 8 per cent subsidy as per their assurance. But, they have reduced the amount. On the other hand, they have increased Pimpri-Chinchwad Municipal Corporation’s (PCMC) subsidy amount. So we have written a letter to the State government to increase the subsidy amount.”

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