Maharashtra has decided to take a cue from Gujarat and abolish the vexed octroi duty. State chief minister Vilasrao Deshmukh on Friday announced that a proposal to repeal octroi would soon be placed before the state cabinet for approval.
The 22 municipalities in the state collect Rs 5,572 crore from octroi and levies annually and it has been a major bone of contention for trade and business, which has made repeated pleas to the government for its repeal.
?The process to abolish octroi duty is almost complete now. The proposal is soon going before cabinet. This will be a win-win situation for all. Octroi duty is a major source of revenue for civic bodies and, thus, the government is contemplating putting in place a mechanism so that these civic bodies are not affected adversely,? Deshmukh said in his address at the ?India?Your Partner? global trade & investment conference organised by the Indian Merchants? Chamber.
The abolition of octroi has been strongly opposed by civic bodies. State finance minister Jayant Patil has asserted that such abolition cannot be made without an alternative source of revenue for civic bodies.
A committee chaired by the state finance secretary Subodh Kumar in its report has already recommended imposition of profession tax by municipal bodies, levy of additional Vat and increased property tax to compensate for octroi losses. The committee also suggested that municipal bodies be permitted to impose and collect their own independent professional tax.
?Imposition of profession tax by (urban local bodies) would require enactment of a separate Profession Tax Act. Municipal bodies would have an option to collect municipal profession tax themselves or to use the services of (the) sales tax department for the initial one or two years,? the committee said.