Local Body Tax commonly abbreviated as LBT is a tax which is imposed by the local civil bodies of India. This type of tax is imposed on any good that enters a local area for use, sale or consumption. Indian traders are required to pay LBT to civic bodies with rules and regulations varying from state to state. Most states in India withdrew LBT when the Value Added Tax (VAT) was introduced.
Maharashtra State is one of India’s state governments that imposed Local Body Tax on traders. However, it met a strong opposition from traders with many linking it to the increase in harassment and corruption from local authorities. It was also considered to be extraneous since Value Added Tax was still under implementation. Many people were against Local Body Tax and proposed for an increment in VAT. Nevertheless, Local Body Tax has proven to be appropriate due to the numerous advantages it brings. Some of these advantages include:
- Source of Income
Local Body Tax is the main source of income for civil bodies in Maharashtra. Actually, it contributes about 50-70 percent of the revenue generated by corporations. Some of the biggest beneficiaries of Local Body Tax are the Pune Municipal Corporation and Pimpri Chinchwad Municipal Corporation.
- Proper Control of Activities
Local Body Tax has made it easier for the state government of Maharashtra to control activities such as consumption purchase, sale or use. This is because the state government monitors every product that enters Maharashtra through LBT.
Local Body Tax is just another new method of maintaining corruption in India since political leaders are using it to earn money. Close to 50% of tax payers money goes to the pockets of highly corrupt individuals with unsuspecting citizens having nothing to do about it.
- Different from the Octroi System
Local Body Tax is quite different from the Octroi System with a trader required to compile the full list of all procured goods within a given month. The trader will then have to feed this information into the specific software issued by the civic body for the main purpose of checking its liability. A trader will also have to make payments after every 40 days using cheques, online portals or even a demand draft.
People view Local Body Tax from different angles with some considering it a good addition while others taking it as a waste of time. The state government of Maharashtra seems to have benefited from LBT since there is an increase in revenue. However, corrupt government officials continue to derail the importance that Local Body Tax brings to Maharashtra. This has made Local Body Tax in Maharashtra a huge failure since most of the money goes into waste. The only solution is making the tax system transparent so that political leaders can be able to account for every penny spent. Once this is done, the government will not lose money in ruthless spending by leaders.