Developers' body says LBT will lead to rise in corruption

Opposing the Maharashtra government’s decision to impose local body tax (LBT) in lieu of octroi, the developers’ apex body has termed the tax as detrimental for it could soon become a ‘breeding ground of corruption.’

CREDAI Chairman Lalit Kumar Jain suggested that the government should instead raise value-added tax (VAT) to compensate for octroi.

LBT is a tax which will be imposed in months to come by the Maharashtra government on certain items that are brought into a municipal corporation territory for sale or consumption. Unlike the Octroi, where the vehicles which carry the goods had to under go physical checks at the toll booths, with LBT, that won’t happen. In fact, once LBT comes into picture, Octroi will be history.

Creation of an additional machinery for LBT collection will only increase burden on the government and it could be avoided through just raising VAT, said Jain.

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He also vehemently opposed the flat one percent LBT on real estate and over and above LBT on all building material as it will lead to increased burden on end buyers who are forced to cough up heavy amounts for a series of taxes.

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“Heavy tax regime will also discourage new businesses and may even lead to a fresh capital flight out of Maharashtra, " Jain said and appealed to Chief Minister Prithviraj Chavan to reconsider LBT and opt for much more practical approach.

He added that Maharashtra was known for trend setting approach in tax rationalisation (Maharashtra was fist to rationalise stamp duty bringing it down to 1% onwards from 10%) and pro development policies but off late we have lost that approach.