The Brihanmumbai Municipal Corporation (BMC) has said it will ask the parliamentary committee, formed for goods and services tax (GST), to gradually abolish octroi. The committee is scheduled to visit Mumbai this week.
The recently passed GST bill to be implemented from April 2016, will lead to the discontinuation of octroi on goods. The civic body is, however, against the abolition of octroi, citing it as a major source of revenue for the BMC.
“It is going to be a huge loss for us if GST is fully implemented from next year. Providing civic services will be affected while major infrastructural projects taken up by the BMC will be jeopardised because of the new tax. In such cases, abolishing a major revenue source will lead to serious financial instability,” said a senior civic official from the assessor and collector department of BMC.
A delegation of municipal and state government officials had in the past two weeks also presented their view to the central government’s urban development department to explain the impact of octroi on municipal revenue.
Octroi must be abolished over a period of five years and commodities such as automobiles alcohol, fuel and tobacco must not be included under the ambit of GST during the period, officials will demand in the meeting next week.
“There are various options that will be presented to the parliamentary committee with a view to ensuring less dependency on the state after GST is implemented. We will also ask them to find a mechanism that will mean revenue earned through GST in the city is directly sent to the BMC,” said Sanjay Mukherjee, additional municipal commissioner, who heads BMC’s finance department.
Octroi paid on alcohol, automobiles, fuel and tobacco contributes to 45% of revenue collection — around Rs3,000 crore — to the BMC’s kitty. The expected revenue collection of BMC from octroi for 2015-16 stands at Rs7,900 crore.