Maharashtra govt to abolish Local Body Tax from 1 August

18 March 2015

The Maharashtra government today announced the scrapping of the contentious Local Body Tax (LBT) from 1 August, and extended tax exemption on essential commodities like rice and wheat in the state budget for 2015-16.

Presenting the Rs198,000-crore state budget for 2015-16, finance minister Sudhir Mungantiwa also announced that a compensation of Rs6,875 crore will be given to the municipal corporations, excluding Mumbai.

The scrapping of LBT was one of the main electoral promises of the BJP and Mungantiwar said local bodies will be compensated by enhancing the Value Added Tax (VAT) rate across the state.

The budget for 2015-16, which focuses on infrastructure, irrigation and tackling the agrarian crises in the state, has a plan size of Rs54,999 crore and an uncovered deficit of Rs3,070 crore.

Mungantiwar refrained from imposing any significant tax burden on the people.

However, he announced a premium on the additional floor space index availed by builders for construction purposes.

An allocation of Rs109 crore has been made for the proposed Mumbai Metro 3 Project, which is currently facing stiff opposition from the people.

The minister said the budget was not based on expenditure but was target-oriented and important for tribals, farmers and minorities, poor and the downtrodden.

The budget proposes to free 223,000 farmers who have availed private loans from moneylenders, complete 38 pending irrigation projects on a priority basis with an allocation of Rs7,272 crore, set up seed bank to preserve seeds traditionally used by the farmers in the state and Rs1,000 crore allocation for water conservation projects to combat drought under Jalyukt Shivaj Yojana.

Mungantiwar announced a Rs2,413 crore project to build rural roads in the state, an Aadmar Adarsh Gaon Yojana on the lines of Prime Minister Narendra Modi's scheme of each MPs adopting villages and plans to overhaul the Maharashtra State Road Transport Corporation.

For Mumbai, an amount of Rs100 crore has been allocated for the grand memorials for Chhatrapati Shivaji in the Arabian Sea off the city coast and another for Dr BR Ambedkar in central Mumbai, free WiFi at certain places in Mumbai under a tourist promotion scheme, a 1000-bed super-speciality hospital to be constructed in the campus of Sir JJ Group of Hospitals and constructing a war memorial for Paramvir Chakra winners.

The state will construct 100,000 homes at a cost of Rs884 crore for the poor, and spend an amount of Rs268 crore on the Smart Cites project. A skill development scheme named after the late Pramod Mahajan and a school of planning and architecture in Aurangabad, special schemes for minority-dominated towns of Bhiwandi, Miraj and Malegaon are also planned.

Other highlights include:

  • Women earning up to Rs10,000 per month will be exempted from paying profession tax,
  • A five per cent tax will be levied on mixed spices,
  • Taxes on lab books, work books and graph books for students waived off,
  • Tax on LED bulbs slashed from 12.5 per cent to five per cent.

A biometric system of monitoring attendance for students and teachers in government-aided schools has been proposed and a state-level 'Mazi Kanya, Bhagyashree' on the lines of the centre's 'Beti Bachao, Beti Padhao Scheme' will be introduced.

Chief minister Devendra Fadnavis welcomed the budget proposals terming them as growth oriented and with many positive schemes for the farming community.

Maharashtra Congress president Ashok Chavan criticised the budget for making a shower of empty promises, questioned how the growth rate which stood at 8-10 per cent for 15 years came down to 5.7 per cent in the 138 days of the BJP-Shiv Sena rule.

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