Opposition demands state compensate city civic body with 14% & not just 8%

Congress & NCP want BMC to get 14% of total revenue of indirect taxes

Opposition parties Congress and Nationalist Congress Party (NCP) have demanded that the state compensate Brihanmumbai Municipal Corporation (BMC) at the rate of 14% of the total revenue of indirect taxes instead of 8% once Goods and Services Tax (GST) is implemented.

The opposition has also demanded that the state extend the date for implementation of this compensation from July 1 to September.

The Maharashtra Assembly passed GST compensation to the Local Authority Act 2017. The main State GST (SGST) is expected to be passed in both Houses in a session that started on Saturday.

A three-day special session has been called to ratify GST. On Saturday morning, Finance Minister Sudhir Mungantiwar introduced the three bills in the House. Of the three Bills, the Maharashtra GST Compensation to Local Authorities Act and Maharashtra GST Related Laws (Amendments, validation and Savings) Act were passed by the members of the lower house unanimously.

While speaking on the compensation Act, Prithviraj Chavan, former chief minister, demanded the extension the date of implementation of GST. “For the first time in the history of India, the right of tax collection has been assigned to a private company — Goods and Services Tax Limited (GSTL).”

He added, “Infosys has been appointed for technical assistance for GSTL but the network is not yet completed. Also, staff of sales tax department need training if a new system is implemented and hence the finance minister is being requested to ask the Centre to extend the date of implementation of GST.”

Jayant Patil, senior NCP legislator, suggested to make a check-and-balance mechanism to monitor whether the corporation has utilised the compensation fund for proper purpose.

Patil also asked why the state will transfer fund to BMC at a compound rate of 8% in annual average income when the Centre will provide the amount at 14%.

A senior Congress leader also expressed fear that the state will not get compensation against Local Body (LBT) tax revenue as it has been already abolished by the Devendra Fadnavis government.

“The state has lost revenue of Rs 5,000 crore-Rs 6000 crore per year from LBT. If it was in existence today, the state would get Rs 25,000 crore within the next five years as compensation from the Centre,” said Chavan.

In his reply, finance minister Mungantiwar clarified that even after five years of compensation, the state will bear the burden from its own budget. “In 2022-23, the state’s projected income will be Rs 4 lakh 19,000 crore and the compensation amount will be Rs. 20,000 crore. The state can bear it,” said Mungantiwar.

He added, “We will review this after five years and if we notice growth in any corporation, we will increase the amount of compensation.”