Local Body Tax in India PPT


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Local body Taxation (LBT) in India

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Local Body Tax in India PPT

  3. 3. PRESENTATION CONTENTS Life Before LBT : Octroi Raj Bye Bye Octroi, Hello LBT! Who all are Covered under LBT ? What are the Compliances ? Why are the Traders in discontent ? My Opinion
  5. 5. THE OCTROI RAJ Octroi was the main source of revenue of Municipal Corporations in Maharashtra. Forcible collection of Octroi at the check post The presence of any provision of Law is always absent at the check post No Octroi practitioner or consultant could legally fight against the malpractices in Octroi department
  6. 6. ABOLITION OF OCTROI Heavy corruption on one side, leakage in Octroi on the other Demand from a class of traders to abolish the Octroi Political Unwillingness Result - Octroi was still present in many Corporations
  8. 8. SOURCE OF LBT LAW Sub section (1) of Section 152T of the Bombay Provincial Municipal Corporation Act, 1949 Introduction of “Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010” Concerned Sections - sec. 152 A to sec. 152 O in chapter XI– A and sec 152 P to sec 152 T in chapter XI-V Governed by Urban Development Department. Extends only to Municipal Corporations
  9. 9. WHAT IS LBT ? Another name of Octroi. Octroi is collected at check posts. In LBT check posts are supposed to be removed. Tax which can be collected by Corporations on the basis of books of accounts like VAT. It is a tax on purchase and not on the sale of goods. It is a self assessment account based tax.
  10. 10. WHEN DOES LBT ARISE ? Any goods which are brought into the Corporation area (import) from outside Corporation area for use, consumption or sale are liable for LBT. LOOPHOLE If the goods imported are not brought in Corporation area and directly sent to godown/office/branch and sold directly from outside Corporation limit then LBT is not payable.
  11. 11. OTHER KEY FEATURES Schedule A is for Taxable Goods and Schedule B is for Tax Free Goods. Rates for Taxable Goods range from 1% to 7%. Most of the Goods are taxed at 3%. There are 59 Essential Commodities which are included in Schedule B. Implementation of LBT shall lead to decrease in prices of these goods. If goods are purchased inside Corporation area from unregistered dealer under LBT Act, then also LBT is payable. (Section 152D)
  12. 12. GOODS & VALUE OF GOODS • “Goods” includes animals. Goods Section 2(25) • So besides the meaning of goods in common parlance, even animals are covered. • In brief all goods are covered. • “Value of the Article” in relation to the goods imported into the city, shall mean the value of Value of the the article as mentioned in the original invoice Article • include insurance, custom duties, excise duties, Section 2(70)C Value Added Tax (VAT), transport charges, freight charges, and all other incidental charges.
  13. 13. IMPORTER VS DEALER Importer Dealer Section 2(16A) • “Importer” means a person who brings or causes to be brought any goods into the limits of city from any place outside the area of the city for use, consumption or sale there in. • “Dealer” means any person who whether for commission, remuneration or otherwise imports, buys or sells any goods in the city for the purpose of business.
  14. 14. In the context of LBT… IMPORT Goods brought from area outside the limits of Municipal Corporation EXPORT Goods sent out of the Municipal Corporation area
  16. 16. APPLICABILITY Dealers under VAT are Deemed Dealers and Need Not Register Registration Non-Dealer Dealer An Importer Not An Importer Temporary Business
  17. 17. CRITERIA An Importer Not An Importer • Turnover of sale or purchases of taxable goods during the year, equals or exceeds Rs. 1,00,000 /- • Turnover of purchases of taxable goods equals or exceeds Rs. 1,50,000/- • Value of goods imported equals or exceeds Rs. 5,000 /in a single transaction • Value of goods imported equals or exceeds Rs. 5,000 /in a single transaction Temporary Registration • Business on a temporary basis • Liable for Compulsory Registration irrespective of turnover of Sales & Purchases
  18. 18. AMMENDED CRITERIA As per new Notification as on 20th June, 2013 Dealer Importer Not an Importer Imports of Rs. 1,00,000 Turnover of Purchase or Sale more than Rs. 5,00,000
  19. 19. EXEMPTIONS PUBLIC USE Goods are imported by State or Central Govt. + Certificate certifying that the goods are for public purpose GOODS EXPORTED FOR PROCESSING Exports carrying processes for out + Reimported without any change, LBT only on the value added. GOODS IMPORTED FOR JOB WORK SALES RETURN Imports for carrying out processes on job work basis Goods sold are received back due to rejection + + Exported within six months, to same person, without any change Received back within a period of six months from export.
  20. 20. REFUND OF LBT Where goods imported, on which LBT has been paid, are exported by the same person by way of sale or otherwise, then ninety percent of LBT so paid. Imported Paid LBT If you are a Regular Dealer, in Return Details of Import Obtain LBT on & Permissionsuch Import is paid Pay only 10% within six months Exported Exported File return claiming Refund Refund Exported without changes
  22. 22. PAYMENT OF LBT Payment has to be made on Monthly basis for all dealers irrespective of Turnover. Payment has to be made on or before the 10th day of month following the period to which the LBT relates to. Payment may also be made as per the Composition Scheme. General Dealers Contract Work Builders
  23. 23. COMPOSITION SCHEMES General Dealers Contract Work Builders Turnover Contract Value Contruction Size Turnover LBT 0 to 1,00,000 Nil 1,00,000 to 2,00,000 4,000 2,00,000 to 3,00,000 6,000 3,00,000 to 4,00,000 8,000 4,00,000 to 5,00,000 10,000 5,00,000 to 6,00,000 Construction LBT per square meter Up to 4 floors (No lift) Rs. 100 Rs. 150 12,000 Upton 7 floors (with lift) 6,00,000 to 7,00,000 14,000 Above 7 floors Rs. 200 7,00,000 to 8,00,000 16,000 8,00,000 to 9,00,000 18,000 9,00,000 to 10,00,000 20,000 0.25% of the Contracted Value May pay LBT, in advance to the extent of 50%
  24. 24. DELAY IN PAYMENT If Not paid on or before the due date 2% per month of such LBT for first 12 months after due date and 3% per month of such LBT for each month thereafter If any LBT is found due as a result of order of assessment, a sum equal to 2% of such LBT for each month from after assessment period till date of order of assessment. Interest shall not exceed the amount of LBT due on which such interest is charged.
  25. 25. FILING OF RETURNS Types Half Yearly Return Form E-I Normal Method Annual Return Form E-II Composition Scheme
  26. 26. PENALTIES Selling dealer does not • Sum not exceeding Double the issue Invoice amount of LBT Failure to Register • Sum not exceeding Ten times of the amount of the LBT payable Failure to Comply with any Notice • Sum not exceeding Rs. 10,000/- Furnishing false Declaration or Certificate • Sum not exceeding Five times the amount of LBT
  27. 27. Late filing of Returns Excess collection of LBT • Rs. 5,000 for each return • Rs. 2,000 or double the amount of LBT, whichever is less
  28. 28. APPEALS Appeals can be made to the Commissioner for any issues. Appeals have to be filed in ‘Form S’ Shall be handled by Commissioner, Deputy Commissioner or Assistant Commissioner
  30. 30. ISSUE #1 – INSPECTOR RAJ MR. MOHAN GURNANI President, Federation of Association of Maharashtra (FAM)
  31. 31. ISSUE #2 – MORE COMPLIANCES MR. YASH ARYA Partner, Indirect Tax, Haribhakti & Co.
  32. 32. ISSUE #3 – INCREASE VAT Maharashtra is the only state in India that has this additional tax All Other States in India have adjusted for Octroi charges by increasing the existing taxes like VAT Avoids the hassle of filing taxes every 50 days for the traders Accountability does not shift to another body
  33. 33. ISSUE #4 – DIFFERENT RATES LBT Rates changes with change in Municipal Corporation. E.g. Industrial Equipment Nashik Aurangabad Navi Mumbai 2.5% 2.0% 3.5%
  34. 34. ISSUE #5 – ADMINISTRATIVE SYSTEM MR. UDAY PIMPRIKAR Partner, Tax & Regulatory, EY
  35. 35. ISSUE #6 – UNCLEAR PROVISIONS Excess Collection of LBT by Dealer is an Offence under Act. LBT is leviable on Purchases, then where does the question of Collection comes from ? If the opinion of Commissioner is not acceptable then Whom should we appeal to ? In VAT if dealer from whom Purchases are made, doesn’t pay tax, the purchasing dealer doesn’t get set off. This way track of tax payments is kept. How will this happen in LBT ? Every Act has an Charging Section. Where is the Charging section for Local Body Tax ?
  36. 36. MY OPINION
  37. 37. IN MY OPINION… Committee of Trading Organizations Proper check on U.R.D. dealers Check Posts Administrative system Clear provisions Anomalies in LBT Rules Details on Website
  38. 38. CONCLUSION
  39. 39. WHAT YOU TAKE AWAY HOME FROM THIS PRESENTATION ? What is LBT ? Abolition of Silly Prehistoric Dinosaur Tax Do It Yourself Tax Good Idea, Poor Implementation
  41. 41. WHAT YOU TAKE AWAY HOME FROM THIS PRESENTATION ? My Opinion Well within Right to Generate Revenues Reduce Corruption Or end-up parallel with Octroi ? More Transparent Tax Models
  42. 42. Contact me - sourabhstt@gmail.com