LBT became game changer for PMC as poor revenue hampered projects

WITH the state government replacing octroi collection system with the local body tax (LBT) for civic bodies, the PMC has been struggling to meet the needs of civic infrastructure. This led to a slowdown in taking up new projects, given the uncertainty in revenue collection that came with the new system.

Octroi was the largest revenue source for the PMC, followed by property tax and building permission fee. However, there were many loopholes in the system with traders taking advantage of it and evading tax allegedly with the help of local politicians and civic staff. Many miscreants were also active in enabling traders to get their goods in the city without paying tax at the octroi post, which led to revenue loss to the civic body.

The state government's decision to replace octroi with LBT was aimed at ending the illegal practices and bring traders in the tax ambit by making them submit details of their business. Initially, the decision did not go down well with the traders; they took to the streets and closed down markets. The protests extended to other parts of the state as traders claimed they might face harassment from civic officials, who had the power of checking their account books.

To get things on track, the state changed the provisions in LBT rules and held back powers of checking accounts with the state government officers instead of the local civic body while revising the rates. For effective implementation, the PMC also revamped the system by bringing in civic staff from other departments for implementing LBT and transferring the octroi staff to other civic departments.

On the basis of the half yearly budget review, the civic administration expects 25 per cent deficit in revenue collection and has been compelled to focus only on completing ongoing development projects instead of starting new ones. The budget estimate for the financial year has been Rs 4,167 crore, but the PMC could manage revenue collection of Rs 1,500 crore due to poor collection from LBT.

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