[manson]

Originally Posted by Gautam Dhaliwal

Are you seriously suggesting that because I buy a lot of stuff from Amazon (it's a nightmare trying to get a size 13 squash shoe in India), I have to get an LBT registration, and pay LBT every 40 days. Surely that can't be true!
Remember, with octroi, everything was done at entry and i didn't have to be assessed or pay tax directly.

Getting away with it and being technically correct are two parallel roads that sometimes meet. Your local L.B.T. inspector will be loaded with authority to ask and punish you for not paying local body tax due on your size 13 shoes.
Whether he exercises his authority is another story. Whether he exercises his authority only in order to get his chai paani is also another story.
You as a domestic / personal level importer (Out of Mumbai to Mumbai) may not be liable to file a return per se, but technically you are expected to pay the local body tax.

Originally Posted by reignofchaos

Not true! Here in karnataka we pay 14.5% VAT

I meant highest tax collecting state in revenue, not rate of tax.

[normally_crazy]

Originally Posted by manson

Your local L.B.T. inspector will be loaded with authority to ask and punish you for not paying local body tax due on your size 13 shoes.
Whether he exercises his authority is another story. Whether he exercises his authority only in order to get his chai paani is also another story.

They will have plenty of staff available once the octroi check posts shut down.

[Gautam Dhaliwal]

Originally Posted by manson

Getting away with it and being technically correct are two parallel roads that sometimes. Your local L.B.T. inspector will be loaded with authority to ask and punish you for not paying local body tax due on your size 13 shoes.
Whether he exercises his authority is another story. Whether he exercises his authority only in order to get his chai paani is also another story.
You as a domestic / personal level importer (Out of Mumbai to Mumbai) may not be liable to file a return per se, but technically you are expected to pay the local body tax.

Getting away with something is not the objective at all. Or not the sole objective anyway. Octroi was an archaic tax and as you have pointed out, it's not as if our tax money is being put to any decent use. However, for me, it is a question of need as well.

What I don't understand is that if i am not liable to file a return then how am i expected to pay a tax. Isn't the applicability linked to a certain turnover? Which in my case would be nil. How can an individual be expected to pay LBT? Don't think this is well understood at all!

[manson]

Originally Posted by Gautam Dhaliwal

What I don't understand is that if i am not liable to file a return then how am i expected to pay a tax. Isn't the applicability linked to a certain turnover? Which in my case would be nil. How can an individual be expected to pay LBT? Don't think this is well understood at all!

Someone here mentioned the turnover limit is Rs. 5,000. which implies that ig you bring in goods worth over Rs. 5,000 into Mumbai from Thane, Pune, Egypt, or even Mars, you are liable to file a return for local body tax.

[Gautam Dhaliwal]

Originally Posted by manson

Someone here mentioned the turnover limit is Rs. 5,000. which implies that ig you bring in goods worth over Rs. 5,000 into Mumbai from Thane, Pune, Egypt, or even Mars, you are liable to file a return for local body tax.

Did some more research, quoting Heetesh Veera, a tax partner in EY in business line - "Dealers are liable to get registered if their turnover exceeds the prescribed threshold — such as when sales/ purchase turnover of goods covered by taxable schedule exceeds Rs 5,000 and the total sales/ purchase turnover of all the goods exceeds Rs 1 lakh."

This threshold has now been increased to 3 lakhs i think. But be that as it may, since i do not have a 1 lakh turnover here, or in Mars. How can i be liable to pay LBT?
I am also not required under any law or provision to maintain accounts and hence any inspection could not really happen. So it should not be applicable to me.

[alpha1]

For Nagpur: http://articles.timesofindia.indiati...ody-tax-3-lakh

A major relaxation among the 12 amendments is the exemption from filling of returns to the traders with a turnover of or below 10 lakh per annum who had to go for lump sum system. Besides, the amended regulations will exempt hundreds of traders from LBT registration purview. Another major change is that the traders with an annual turnover of 4 lakh or more and importers bringing goods worth 3 lakh or more will now have to register themselves. Earlier, the mandatory norms were 1.50 lakh for turnover and 1 lakh for importing the goods.

http://www.business-standard.com/art...1300220_1.html

Originally Posted by Maharashtra chief Minister Prithviraj Chavan

After in-depth consultations with all stakeholders, the alternative of LBT was formulated and the legal provisions and rules regarding LBT were framed substantially in accordance with the recommendations made by the representatives of various trade organisations in August 2009.

For municipal corporations other than Mumbai, the law for LBT was duly passed by the state legislature in December 2009 after extensive deliberation and the State Government is accordingly implementing the same. Over the last three years, LBT has already been successfully introduced in D-class corporations across the State.

I don't get it, what were our activists doing all this while?

[scopriobharath]

Originally Posted by alpha1

A day would come when even air & water would be taxed in India.

Water is already taxed in india. I pay Water Tax to MEtro Water in Chennai and also pay VAT, Sales tax etc for a bottle of bisleri / aquafina

Originally Posted by alpha1

Let me get this right:

In case of LBT, even I am not clear of the mechanism, and how it will be enforced with a retailer who sits outside the municipal limit!
Perhaps the transporter would be deemed as a retailer? But that doesn't look logical.

It would be similar to customs. Retailers operate on "prepaid" model. The retailer recevies the money and then ships the goods with a disclaimer taht OCtroi is to be borne by consumer. If the goods are stopped by surprise check, its our resonsibiliy to pay LBT and get the item cleared

Originally Posted by Gautam Dhaliwal

Exactly!
It seems like we won't have to pay LBT - Can anyone confirm this?

We need NOT pay LBT, if the items is a used item in other state and is being brought in for personal use only. Example a sofa set, a cot when i shifted my home from chennai to mumbai. I would not be re-selling my furniture at all

Originally Posted by Gautam Dhaliwal

How can it be my responsibility to check that a shop has paid LBT?

My question still remains, maybe you can help. If i order something from amazon, presumably as octroi will not be there, the courier company will not have to pay anything. Is it my responsibility to pay LBT? Should not be, since i am not a trader. Does this mean stuff purchased from out of Maharashtra is cheaper for me?
E.g. even in your mobile phone example, i can easily prove that the seller was from out of state and hence no LBT was to be paid.

LBT must be paid for new items, and it is expected by the Govt, that we must Pay LBT, if an item is brought in. If it is a used item, it is exempted from LBT. If it is an item bought new in another state, we must pay LBT, but how it would be enforced is another question.

Originally Posted by Gautam Dhaliwal

How will amazon get an LBT number or pay LBT? Or even a seller in Delhi, i'm sure they don't have to pay LBT. Neither do i, i think.
This is too complex, in any case isn't LBT supposed to be paid on purchases by a trader/retailer and is not linked to sales of the purchases unlike VAT.

The private buyer must pay LBT in that case. Seller need not pay. Again, How its enforced is a different ball game.

Originally Posted by normally_crazy

Well as per rules - every buyer has to be registered with an LBT number.
Mobile phone - you should show them the bill from where you got the phone. That should have an LBT number..if it doesn't the seller hasn't paid LBT (cheated the govt) and you bought stuff imported into the state illegally.

This "buyer" refers to the trader and not consumer. The Trader "buys" and sells. He msut have an LBT. not us.

Originally Posted by Gautam Dhaliwal

Are you seriously suggesting that because I buy a lot of stuff from Amazon (it's a nightmare trying to get a size 13 squash shoe in India), I have to get an LBT registration, and pay LBT every 40 days. Surely that can't be true!
Remember, with octroi, everything was done at entry and i didn't have to be assessed or pay tax directly.

Nope - LBT needs to be paid only one time for one goods. The trader must pay the LBT once every 40 days. We, the consumer are not impacted by it.

Originally Posted by Gautam Dhaliwal

What I don't understand is that if i am not liable to file a return then how am i expected to pay a tax. Isn't the applicability linked to a certain turnover? Which in my case would be nil. How can an individual be expected to pay LBT? Don't think this is well understood at all!

THis is India. forget Returns / refunds. . Individuals must pay LBT (similar to Octroi) for new goods that are brought in for use. USed goods like furniture, firdge, Washing machine etc may be expemted.

[Gautam Dhaliwal]

Originally Posted by scopriobharath

The private buyer must pay LBT in that case. Seller need not pay. Again, How its enforced is a different ball game.

There is a minimum limit for this. Presumably it is 3 lakhs, so as long as i am below Rs. 3 lakhs worth of imports an year for personal use, i should be ok is my understanding.
No LBT liability.
I have not heard anything to the contrary here which made sense.

[mmmjgm]

The whole brouhaha is that there are no clear laws/rules/procedures stated out in the LBT act as drafted by the Government, in its present shape and form the law states LBT must be paid, every one is liable for inspection, we spent nearly 21 years outside the Inspector Raj, now we go too far back into it if LBT is applied. Again filing an appeal is no small or laughing matter, it takes months. Rather shut shop here and open in Kandla or Gujarat. Far better that way.

[manson]

Originally Posted by scopriobharath

This "buyer" refers to the trader and not consumer. The Trader "buys" and sells. He msut have an LBT. not us.

Nope - LBT needs to be paid only one time for one goods. The trader must pay the LBT once every 40 days. We, the consumer are not impacted by it.

Right. But you will be liable to pay LBT and even penalties if goods purchased by you are from an LBT default dealer / retailer.
And, it isn't as real time that a dealer would be classified as a defaulting example. It would probably happen two or even three years down the line when his / her file is up for assessment. If the dealer shows the civic body their empty palms, the penalty order will surely be at your doorstep. This obviously will happen if the dealer maintains his sales books.

Originally Posted by Gautam Dhaliwal

[/b]This threshold has now been increased to 3 lakhs i think. But be that as it may, since i do not have a 1 lakh turnover here, or in Mars. How can i be liable to pay LBT?
I am also not required under any law or provision to maintain accounts and hence any inspection could not really happen. So it should not be applicable to me.

Are you aware that you can't drive into Maharashtra with alcohol from Goa? Similarly, I'm assuming you will not be allowed to bring down anything from outside of a certain civic limit unless you pay the necessary local body tax. I've seen people having to pay Octroi duty for even used cars when they wanted register under their Mumbai postal addresses. Again, this is my assumption and I could be terrible wrong about everything I just said.

[Gautam Dhaliwal]

Originally Posted by manson

Are you aware that you can't drive into Maharashtra with alcohol from Goa? Similarly, I'm assuming you will not be allowed to bring down anything from outside of a certain civic limit unless you pay the necessary local body tax. I've seen people having to pay Octroi duty for even used cars when they wanted register under their Mumbai postal addresses. Again, this is my assumption and I could be terrible wrong about everything I just said.

Sorry, but you have to look at this afresh, we tend to bring context into new situations by comparing them to older ones. Which is a dangerous thing to do when it comes to law in general. We have to understand what is the letter of the law, it's spirit and applicability. I have limited understanding of LBT, that is why i am asking questions, conjecture/logic rarely helps in understanding taxes

Octroi was a tax levied on movement of goods at the octroi naka. This had no relation to the final usage of the goods, so if you are in a private car, moving from delhi to mumbai, carrying your old computer, etc with you they could stop you and ask for octroi based on current value of those items. This did happen to me!

In the context of your old car, even if it was not registered in mumbai, you were liable to pay octroi. As you were responsible for the movement of the car into mumbai. There was a grace period of course. This was also due to the fact that if they allowed used items, no one would have bought anything of value in Mumbai, even a 2 month old TV/car/speed boat is used, right?

Now, to LBT. It is a self assessment tax to be paid by the people who are importing goods into mumbai. Now, we have to examine the applicability, the people under it's ambit and the liability of any importer.

As i understand it from all the discussion and my research, if i am importing goods worth more than 3 lakh rupees per annum, only then am i under it's ambit. By putting a limit to the value of imports per year, they have also solved the issue of high value purchases being made outside mumbai.

Alpha1 had posted earlier "another major change is that the traders with an annual turnover of 4 lakh or more and importers bringing goods worth 3 lakh or more will now have to register themselves."

This may be applicable to individuals purchasing goods for their own consumption. Then we would have to understand our liability in terms of registration, payment of taxes and maintaining records. I am worried that we may have to import through a registered importer in such a case, which will be a bummer!

[scopriobharath]

Originally Posted by Gautam Dhaliwal

There is a minimum limit for this. Presumably it is 3 lakhs, so as long as i am below Rs. 3 lakhs worth of imports an year for personal use, i should be ok is my understanding.
No LBT liability.
I have not heard anything to the contrary here which made sense.

Question: Should we as a personal buyer keep tab of our purchases within 3 lacs per annum?

Originally Posted by manson

Right. But you will be liable to pay LBT and even penalties if goods purchased by you are from an LBT default dealer / retailer.
And, it isn't as real time that a dealer would be classified as a defaulting example. It would probably happen two or even three years down the line when his / her file is up for assessment. If the dealer shows the civic body their empty palms, the penalty order will surely be at your doorstep. This obviously will happen if the dealer maintains his sales books.

How would Govt Track the same. With this LBT Rule, even a local provisions shop comes under scanner. There is no record of the fact that i have purchased, as it is just a cash transaction that takes place at the shop. If he is a defaulter and assuming i am even ready to pay, how will the govt track me down? It may be partially possible in big retailers like big bazaar / lifestyle etc, but they would have to maintain database of addressed and phone numbers of all customers and purchases made. This is not impossible, but is impractical and not fool-proof.

Thoughts?

[ACM]

Originally Posted by manson

Maharashtra has consistently been the highest tax collecting state since the implementation of V.A.T. (12.5% V/s 5.5%) in most states. You tell me, what have you got in terms of government infrastructure in the last 10 years?


As indicated above, V.A.T. in Maharashtra is levied at a massive 12.5% opposed to 5.5% in most other states. At time of introduction of the comparatively higher rate of V.A.T., it was informally informed that the higher rate of V.A.T. would factor in for the octroi levy of 5.5% that was soon to be abolished. For over 5 years businesses within Octroi limits have been hoping for Octroi to be abolished. Now when the government has finally gotten around it, they have introduced L.B.T. which has left the traders' union aghast.

True, there is surely more that meets the eye here.

Firstly, I personally think that the whole traffic build up issue is blown way out of proportion. I pass atleast one octroi post twice a day five times a week and a traffic build up is a very rare phenomenon. There is exponentially worse traffic caused due to inadequate and sub standard infrastructure but the government would not do a thing about that.

Also, what is your argument of replacing NMMC cess with the NMMC LBT? In terms of book keeping and procedures it is identical to LBT but Cess was charged at a flat rate of 1%, whereas if your goods are not classified under the tiny chapter of LBT, flat 4% is the norm.

Computerized or not, the LBT is going to provide a concrete platform for corruption.

From basic understanding of business, any cost / expense will be charged to the end customer as it is a cost to the trader. I do not understand how you presume that a trader is going to absorb a 4% levy. Even in the octroi regime, a trader obviously factored his cost of octroi (5.5%) in basic price before billing goods to the customer.

Octroi already is known to be a major source of corruption. Infact the Octroi collection officers have earlier gone of strike to protest against it's removal for obvious reasons.

I do get stuck in octroi naka jams a lot at both dahisar and thane ends - at night when the trucks are allowed into the city post 10 pm. (I stay at thane) so to catch an early morning or late night flight I should be able to breeze through but can't and need to keep a large safety margin as if one is stuck it can even be an additional hr.

LBT is replacing Octroi and the LBT rate is not higher than that of Octroi so how and why would the consumer be affected. If at all he will save a bit. In anycase both these taxes have to be within the MRP price of the product as per the low of the land.

Actually I see no reason why Navi Mumbai should today have a different (lower taxation rate compared to Mumbai and why Thane should have a higher rate than Mumbai. Frankly would be the first to advocate that all three should have the same rates.

I did not get any informal indication of Octroi being a part of VAT - no one told me

While we crib about the rates in Mumbai lets us also think about the taxation rates in Bangalore. (and the solution is not to start looking at Goa rates).

I think we all can make out points and then I guess we can just about agree to disagree.

[Gautam Dhaliwal]

Originally Posted by manson

Are you aware that you can't drive into Maharashtra with alcohol from Goa? Similarly, I'm assuming you will not be allowed to bring down anything from outside of a certain civic limit unless you pay the necessary local body tax. I've seen people having to pay Octroi duty for even used cars when they wanted register under their Mumbai postal addresses. Again, this is my assumption and I could be terrible wrong about everything I just said.

Originally Posted by scopriobharath

Question: Should we as a personal buyer keep tab of our purchases within 3 lacs per annum?

Check this out..

http://taxguru.in/goods-and-service-...ighlights.html

Quotes from the link -

Importer: “Importer” means a person who brings or causes to be brought any goods into the limits of city from any place outside the area of the city for use, consumption or sale there in.

Dealer (S. 2[16A]) : Bealer” means any person who weather for commission, remuneration or otherwise imports, buys or sells any goods in the city for the purpose of business or in connection with or incidental to his business and includes factor, broker, commission agent, auctioneer, Central & State Government, Society, Club and A.O.P. As under MVAT Act Port Trusts, Railway etc are also covered to the extent of disposal of goods etc. Non-resident dealers like petrol, diesel and oil companies and their dealers, traders doing temporary business like sale, exhibitions are also covered.

Exception in the definition of dealer
Any individuals who imports goods for his exclusive consumption or use and a department of State & Central Government not engaged in business shall not be a dealer.

Registration:

a. Importer: The dealer who is an importer and whose turnover of sale or purchases of taxable goods during the year, equals or exceeds Rs. 5,000/- and the value of goods imported equals or exceeds Rs. 5,000/- and the turnover of Sales or Purchases equals or exceeds Rs. 1,00,000/-, then he is liable for registration under LBT Rules.

b. In any other case: The dealer who is not an importer and whose turnover of purchases of taxable goods equals or exceeds Rs. 5,000/- and turnover of all his sale or purchases during such year equals or exceeds Rs. 1, 50,000/-.

Although these limits have increased, but the logic remains the same. This seems like a credible source, so views that every purchase an individual makes for own consumption from outside Mumbai will be liable under LBT are not accurate.

We can get cheaper stuff by buying from outside Maharasthra!

So no octroi has some benefit for us.

[srgntpepper]

The trader lobby does a major chunk of its transaction in cash, so they have vested interest in opposing the LBT.

However, in the way it is structured, LBT is going to be disastrous not only for traders but also for manufacturers in Maharastra.

Certain examples :

1) I am a manufacturer in MIDC Tarapur. When I imported foreign goods via NHAVA Sheva, I didnt have to pay octroi. I will now have to pay LBT.

2) Lets say a trader imports goods and stocks them at Bhiwandi. He pays one layer of LBT at the port. When he sells the same goods to me, he adds another layer of LBT. I use those goods to manufacture something, and when I sell them, I have to add a third layer of LBT. Now if you assume the trader worked at a 3% margin and I at a 10% margin. earlier situation goods worth Rs 100 at Nhava Sheva could be sold at 100*1.03*1.1= Rs113.3. Now if the profit margin is to be retained for a 1.5% LBT at each stage, the final selling price will be 116.7. So, on a value addition/profit of Rs 13, the govt will collect Rs 3.4 tax, ie the LBT is equivalent to a 26% Income tax layer.
This will have to be borne by the consumers.

Comparison to octroi is not fair. octroi was an entry tax. LBT is applicable at each stage on the entire value, not on the value addition at each stage.. Since it cannot be setoff, it is double/triple taxation.

3) Since this is not applicable outside of maharashtra, manufacturers here will be handicapped against those outside. Traders in Maharashtra will simply not be sell outside; why would anybody buy from a source here, when the same thing can be bought cheaper from Gujarat?

4) To save LBT at time of import, it might make sense to import goods in Gujarat and buy on high seas basis and pay transport, rather than import at JNPT/Nhava Sheva.

This is a myopic, corrupt policy that will have very serious consequences for everybody.

Even a 10% state income tax might be a better option than LBT. Atleast it will be a one time annual return, not a daily transaction with multiple ledgers to maintain.

It is depressing to see a state that used to be a leader to behave like this under the leadership of a CM from BITS Pilani, and UC Berkeley. what hope do we have if some conventional thug/politician were at the helm?