KOLHAPUR: The municipal corporation has to study the impact of the Goods and Service Tax (GST), which will be rolled out from April 1 next year.
The GST is considered as the biggest reform in the indirect tax sector. The new system will subsume several taxes such as octroi and local body tax (LBT) primarily imposed by the civic bodies to generate revenue. However, the government abolished LBT for the traders having turnover of less than Rs 50 crore. Recently, the state government even allowed collecting LBT from liquor manufacturers and sellers with less than Rs 50 crore turnover.
Sanjay Sarnaik, chief accountant in the Kolhapur Municipal Corporation (KMC), said, “Since the past one year, the government is releasing monthly grants as compensation for abolishing LBT. The state government will be responsible to compensate civic bodies after the GST is introduced. At present, the government has issued broad guidelines of the GST. We are awaiting the details to begin our study, based on which the compensation amount will be suggested.”
Both houses of Parliament have approved the constitution amendment bill for introducing the GST. Now, it is the turn of the state governments to ratify the bill. As per the bill, a council will be formed wherein minute details of the GST will be worked out. Ever since LBT was abolished, the government has released over Rs 90 crore as compensation to the KMC.The civic bodies hope to raise Rs 10 crore from those with turnover more than Rs 50 crore as well as from liquor sellers.
“The KMC heavily depended on the collection through LBT for managing its daily affairs. We are demanding the compensation amount to be increased. In such situation where not much is made out of the compensation, we are going to study the GST in detail and formulate plan to get the maximum compensation,” said Sarnaik.
During 2015-16, the KMC faced shortfall of around Rs 15 crore owing to the abolishing of the LBT. The KMC has sought around Rs 12 crore every month as the compensation; however it has received not more than Rs 8 crore.