Dip in oil prices hits octroi inflow, BMC may hike taxes

MUMBAI: The falling prices of crude oil is not only bad news for the Mumbai civic body, but for you too. The drop is leading to less octroi for the Brihanmumbai Municipal Corporation (BMC) as the first quarter of the year has recorded a 20 per cent dip in the collection of octroi from crude oil.

This may lead to the BMC increasing taxes to make up for the losses, according to sources.

There has also been financial uncertainty in the BMC as the civic body is likely to be compensated based on this year’s revenue collected through octroi by the Central government after the Goods and Service Tax (GST) comes into force, probably from the next financial year. This continuous dip in octroi collection will only add to the woes of the citizens.

The reason: To make up for the losses, the BMC will look to increase some other charges/ taxes in the coming months. The civic body may raise water taxes or revise property tax. The civic body may also seriously look at levying a solid waste management tax, which has been in planning stage for over three years along with implementation of slum tax that has been once deferred by the political wing of BMC.

While the civic body has failed to generate any higher amount of revenue in the first quarter of the year, the civic officials have feared achieving the estimated revenue of Rs6,800 crore from octroi this financial year. Octroi duty is the civic body’s main source of revenue, which has been recording a dip since the past two years owing to a reduction in octroi collection from crude oil. A significant share of about 35 per cent of octroi comes from crude oil coming to the city’s refineries.

The civic body has recorded Rs395 crore from crude oil in comparison to Rs495 crore recorded last year. The total revenue collected by the BMC until July 21 was Rs1,810 crore and it now has a target of Rs5,000 crore to achieve in the remaining eight months of the fiscal year. Even in the 2015-2016 financial year, the civic body suffered a dip of about Rs500 crore in octroi collection.

One of the senior civic officials said, “We are looking at achieving our targets, but it can be done easily if the crude oil market is stable, which doesn’t seem likely. Thus, we are looking at increasing our collection from octroi nakas, which we have done considerably in the first quarter, but owing to a dip in crude oil octroi collection, we cannot show profits in comparison with last year.”