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Old 14th May 2013, 10:56   #16
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Default Re: The LBT: Local body tax Fiasco

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Originally Posted by tsk1979 View Post
No, having LBT, TBT, DBT etc., is rubbish. There should be one common tax. These millions of taxes are the reason it is so difficult to be an entrepreneur in India. The country should move to a single point taxation regime, with revenue sharing from taxes being done at the govt level.
Agree in theory but in practice for that to happen the central and state govt. (with various different parties in power) need to come to a common playing field. That is not going to happen anytime soon. The Govt. needs to run in then meanwhile. Hence LBT.

Even if one states that the Centre and State Govt. In Maharashtra are from the same party the problem is a) That a Taxation rule from the centre cannot be for limited states only and b) The BMC with collects the Octroi etc. has the Shiv Sena and BJP in power out here, and they would have a say.
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Old 14th May 2013, 11:31   #17
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Default Re: The LBT: Local body tax Fiasco

Stopping all local taxes and collect in terms of only VAT has some problems. VAT is collected by state government and problem comes while giving share to muncipal corporation. On what basis muncipal corporation will get money. How do we find out which corporation consumed what amount of goods? Again it will need book keeping of sales in particular corporation. Some sort of formula needs to be devised based on population and industry which I think is difficult. Small muncipal corporations consuming more goods will be at loss. Everything will be dependent on formula. Or consumption log needs to be maintained by each trader and based on that share can be calculated.

Second disadvantage to Single tax is that it will remove financial independence of corporations through which credit rating of corporations is decided. Based on this corporations get funding from banks/world bank for execution of some projects.

Corruption might change this logic and I am not considering it right now. Every shop owner requires some efforts but for some time, once everything is computerised then small stores will look like big malls. Every item will have barcode, bills are generated through system. It will take away all head ache of book keeping.

But question comes for really small shops, panwalas, they can not computerise their business and manual book keeping will be headache.

I see lot of Shop Automation Solution providers will be happy with LBT implementation.

Last edited by sushantr5 : 14th May 2013 at 11:33.
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Old 14th May 2013, 11:42   #18
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Default Re: The LBT: Local body tax Fiasco

I think the GST has both a State and Union component. All other taxes will be subsumed into this. This was first mooted by the NDA, and the panel is headed by Modi (Sushil & not Narendra). Opposition is all politics, with NDA govt UPA opposed, and now the other way round.
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Old 14th May 2013, 11:55   #19
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Default Re: The LBT: Local body tax Fiasco

Am redoing my house and had bought some LED lights; unfortunately a few had issues and was waiting for the shop to open in Andheri West. Thank goodness they reopened just yesterday; got them replaced but could not two pieces. Anyways.

I happen to speak to the shop owner and he went on and on about LBT - he said that in the long run everyone is going to suffer and that major international companies are on their way to India / Mumbai and therefore trying to push the government on the LBT issue.

He said that all the shops will be shut tomorrow onwards as there is a big meeting today at 3 pm. None of the traders are agreeing to the demands on LBT and this time around they will be more united. In short it means that the sufferers are going to be the common man.

He then mentioned that there was lathi charge in zaveri bazar yesterday at 4 pm where the traders had gathered and was extremely surprised that none of the news channel picked it up. Only people who know about this can confirm...I will not be able to authenticate any of the updates above.

I sure smell a Rat here! Like they say, there is no smoke without Fire!
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Old 14th May 2013, 15:40   #20
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Default Re: The LBT: Local body tax Fiasco

Consider:
How easy is it to get refund for tax collected on goods incoming and now being sent out of the area?
Why traders oppose is also on account of restrictive nature of tax administration. Government bodies are too happy getting tax credits but getting refunds for goods resold outside the limits...ask exporters who have to face undue delays in getting taxes refunded on exports.
Single point tax administration means one time hassle of presenting accounts. This creates another point where books have to be (assuming they are maintained) have to be shown and returns got approved.

Also does any government body care to open up itself for audit of their performance?
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Old 14th May 2013, 15:59   #21
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Default Re: The LBT: Local body tax Fiasco

Here is something interesting: https://www.facebook.com/Maharashtra...48558895236327
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Old 14th May 2013, 16:03   #22
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Default Re: The LBT: Local body tax Fiasco

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Also does any government body care to open up itself for audit of their performance?
Agreed, however there is an RTI act which gives citizens the power to audit the government agencies. Also there concept of limited tenure of legislature as well as government ensures that non-performers are weeded out.

Unfortunately none of the above is actually utilized in practice ... and we have masses voting based on which politician celebrated the local festival with biggest fanfare, but not caring about where their money (paid via taxes, duties, cess, cess upon cess) is actually going.

Also this issue has been prevalent ever since we gained independence, no one cared about it till now. No bandhs by anyone for this reason.


Regarding the refund angle, how does the state VAT function? I am not really aware of the paper work, but as far as I know initially you have to pay the 12.5% VAT upfront upon invoicing. You get a VAT refund later, upon showing the proof of sale to another party.



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Originally Posted by sgiitk View Post
I think the GST has both a State and Union component. All other taxes will be subsumed into this. This was first mooted by the NDA, and the panel is headed by Modi (Sushil & not Narendra). Opposition is all politics, with NDA govt UPA opposed, and now the other way round.
Power will go to the hands of rascals, rogues, freebooters;
all Indian leaders will be of low calibre & men of straw.
They will have sweet tongues & silly hearts.
They will fight amongst themselves for power & India will be lost in political squabbles.
A day would come when even air & water would be taxed in India.

Last edited by alpha1 : 14th May 2013 at 16:07.
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Old 14th May 2013, 16:08   #23
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Default Re: The LBT: Local body tax Fiasco

LBT is nothing but corruption,inspite of showing complete you will have to bribe Diwali Bakshish and when they audit your complete yearly file you need to pay them Rs.5-10-15,000 extra to get your firm cleared.

These guys are making everyone busy in other stuff so they can hide the scams they have done .. hahahahaha our country is a big joke,I pity being born in such a disgusting country.

Some how i wonder did our freedom fighters were really born here or thats just a fairy tale to us lolz
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Old 14th May 2013, 16:11   #24
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Default Re: The LBT: Local body tax Fiasco

How many of us remember getting bills from the local kirana shop? Even when we shop from medical shops & bigger retail outlets (not the chains), we need to ask them to give a bill (in their defense some of them do provide a bill without asking). All we check is if they are charging us the correct amount.

This is a step in the right direction. I don't know what new levels of corruption/under-the-table transactions this will breed, but still I consider it a step clearly in the right direction.

Edit:
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Originally Posted by Samurai View Post
Oh.

That gives a completely new set of info. Thanks for sharing this.

Last edited by ninjatalli : 14th May 2013 at 16:16.
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Old 14th May 2013, 16:34   #25
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Default Re: The LBT: Local body tax Fiasco

I think the traders have a valid argument here. In this era when we expect simplification, why does the state government want to burden them with another tax? And why must the administrative headaches be passed on to the traders?

LBT would create the following headaches for traders:
1) Additional manpower and computers to run the software
2) Additional bribes (BMC is notorious for their corruption)
3) Sharing of financial details with the BMC (Traders are running scared that their financial records will be available to their competitors on payment of chai paani
4) Scope for prosecution by the BMC
5) No setoff for goods exported by traders, leading to double taxation (for example a trader importing goods into bombay and then selling it to a party in thane would need to pay LBT twice)

Think about it, the traders are willing to pay additional taxes, they are telling the government to increase VAT, but another tax is simply not acceptable, especially one which is so prone to misuse.
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Old 14th May 2013, 19:10   #26
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Default Re: The LBT: Local body tax Fiasco

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Originally Posted by sushantr5 View Post
Stopping all local taxes and collect in terms of only VAT has some problems. VAT is collected by state government and problem comes while giving share to muncipal corporation. On what basis muncipal corporation will get money. How do we find out which corporation consumed what amount of goods? Again it will need book keeping of sales in particular corporation. Some sort of formula needs to be devised based on population and industry which I think is difficult. Small muncipal corporations consuming more goods will be at loss. Everything will be dependent on formula. Or consumption log needs to be maintained by each trader and based on that share can be calculated.
It is true that a formula will be required and there may be some give and take in the exact amounts. But it is still something to be sorted out among fewer parties. Why impose this on the bulk mass of traders instead?

Quote:
Originally Posted by sushantr5 View Post
Second disadvantage to Single tax is that it will remove financial independence of corporations through which credit rating of corporations is decided. Based on this corporations get funding from banks/world bank for execution of some projects.
Ultimately both the Govt and Municipal bodies are a part of governance per se. I do not understand, if the VAT sharing formula is worked out, how will local bodies be at loss. The funds may not transfer immediately to the local bodies, may be they can transfer quarterly or so. In the meantime state Govt may give credit to the local bodies of amounts approximating to their quarterly share.

If there is will in the Govt, things can always be worked out.

In absence of it, they find the easy way out of beating up the poor people with all the burden. It could also be that they want to create an area for corruption to gather funds for elections...
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Old 14th May 2013, 20:01   #27
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Default Re: The LBT: Local body tax Fiasco

Its very simple on why they are protesting. VAT can be easily passed on to the end consumers as it is part of the billing. VAT is charged on every product or service that is sold not purchased by the retailer. So, they can mention the VAT percentage on the bill and pay them directly to the State Government. LBT cannot be added to the bill and hence cannot be passed directly to the consumers. So, LBT needs to be paid directly by the retailers to the municipality exactly as the Octroi is levied.
So, everyone knows how the retailers evade Octroi and improve their profit margins. With LBT, they cannot do so and they can't pass it to consumers either. They will have to stick to MRP as well since no consumer will buy products above MRP unless there is severe shortages. (Infact selling above MRP is illegal)
All those protesting are simply trying to find reasons to evade tax and increase their coffers. If they say that government officials will harass them and bribery increases, then thats a myth. If all papers are in order, then no government official can look for a bribe and if they do, then these retailers need to stand up and protest then.

For those who are interested to see the LBT and their rates you can look at this link http://www.punecorporation.org/pmcwe...BT%20Rates.pdf

(Some of the entries in the list is funny as also the language so, enjoy!!)
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Old 14th May 2013, 20:55   #28
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Default Re: The LBT: Local body tax Fiasco

LBT introduction timing just an year before the GST gets going has become questionable.
The consumers like me pay LBT for services as the trader's monetary turnover for sales and service are both included.
Octroi was a duty payable on new goods imported for consumption within the city.
Octroi never dealt with services like car repair and so on. It was only payable on the purchase of a new car or bike or for that matter any goods.
The traders are saying that the government can add a percent or two to VAT and do away with LBT. LBT will expose them to the inspector raj and undue harassment.
The Inspectors can be transparent, translucent or even opaque when the knock at a trader's door.
The trader's paperwork (or computer data entries) will increase and he has to maintain an account of all the sales and services he or she offers.
This inherent fear of unnecessary harassment has brought all the traders in Maharashtra together and they are trying all to persuade the government to do away with LBT.

Last edited by anjan_c2007 : 14th May 2013 at 20:58.
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Old 15th May 2013, 00:43   #29
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Default Re: The LBT: Local body tax Fiasco

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Originally Posted by alpha1 View Post

Power will go to the hands of rascals, rogues, freebooters;
all Indian leaders will be of low calibre & men of straw.
They will have sweet tongues & silly hearts.
They will fight amongst themselves for power & India will be lost in political squabbles.
A day would come when even air & water would be taxed in India.
Alpha
Hi
Winston Churchill is said to have given this speech when it was announced that India would be given its independence.
Another version says "Except for the air they breathe everything will be taxed to death"
This speech seems to have come true. Except for the air every thing and in every way is taxed.
Incidentally AFAIR Maharashtra and Ethiopia are the only places which have this ancient tax.
Another titbit. Around 1985 the then CM of Maharashtra,Mr.Sharad Pawar had promised to do away with octroi within 1 year. We are still waiting.
Regards
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Old 15th May 2013, 09:15   #30
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Default Re: The LBT: Local body tax Fiasco

I have a basic question on this, does this mean that if I buy anything for my consumption from outside of Maharashtra - maybe even India, I don't have to pay octroi? In that case, I would just buy big items like cars etc from outside and get it registered here. And no more octroi on amazon purchases! This is a big plus for the consumer!
Experts - is my understanding correct?
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