Local Body Tax (LBT)

LOCAL BODY TAX
PRESENTED BY -
B h u s h a n G a n g
S h r a d d h a
C h a n d w a d k a r
C h e t a n L o h a r
R u p e s h
G a y a k h e
P r a n a l i K u t e
A j i t
C h a u d h a r i
H a r s h a d a

CONTENTS
o Introduction of LBT
o History (origin of LBT)
o Rates Applicable
o Protest By People
o Advantages of LBT
o Exemption
o Registration Details
o Payment Options
o Maintenance Of Register
o Refund of LBT
o LBT on Stock Transfer
o Protest Of LBT
o Advantages of LOCAL BODY TAX over Octroi

What is LBT ?
LBT is the tax imposed by the local
civic bodies of India on the entry of
goods into a local area for
consumption, use or sale therein.

Who is liable to pay?
Any trader with a turnover of
purchases and sales is not less than
Rs.5000. This includes the local
kirane wala and even the local pan
wala.

 All Proprietorships
 All Partnerships
 Companies, LLPs
 Trusts
 Service Industries such as Software
Companies, CAs, Advocates, Hospitals,
etc.
 HUF, AOP, BOI
 Govt. Departments who import goods
for Profit.
(Note: Applicable only if turnover
Also Includes….

What is taxable under LBT ?
Entry of goods in the city limits for
use, consumption or sale therein is
taxable event under LBT.
Services are not included in LBT. It
has service tax differently

History(Origin of LBT)
 Octroi system was in practice in Maharashtra since
1965.
 In March 2013, in a joint session of the
Maharashtra Legislative Assembly, the Chief
Minister of Maharashtra Prithviraj Chavan
announced that the octroi and cess will be cancelled
and LOCAL BODY TAX would be levied in the
municipalities cities like Mumbai, Thane, Pune and
Nagpur, etc…as trucks won't have to halt at check
posts for inspection and octroi payment.
 Other municipalities implemented LOCAL BODY
TAX effective from 1 April 2013 and Mumbai is
planned to implement from 1 October 2013.

How Does It Work ?
A l l t h e t r a d e r s w i l l
h a v e t o k e e p a
c o m p l e t e l i s t o f a l l
t h e g o o d s p r o d u c e d
w i t h i n a m o n t h i n
s o f t w a r e p r o v i d e d b y
c i v i c b o d y . I t w i l l
c h e c k t h e i r L O C A L
B O D Y T A X l i a b i l i t y .
T h e p a y m e n t w i l l h a v e
t o b e m a d e o n c e i n 40

Rates Applicable
Rates of LBT are given in Schedule A and vary
from city to city.
It ranges between 0.1 to 8 % on different goods.
Most of the Products the rate is 4 %

Rate Standards
Turnover of all purchases during
a year
LBT Payable
Per Year
Upto Rs. 1,00,000/- NIL
Rs 1,00,000/- but not Exceeding Rs 2,00,000/- 4,000/-

Rates Applicable for Builders
a. Construction up to 4 floor Rs. 100 per square meter .
b. Construction up to 7 floor Rs. 150 per square meter .
c. Construction above 7 floor Rs. 200 per square meter .
Any Developer or person undertaking any work within
Municipality limits have an option of either paying LBT on
value of goods imported into local limits. OR
paying tax @ 0.25% of their total contract value.

• Good for which rate of VAT is 0%
, rate for the same under LBT will
also be 0%
• Where as goods for which VAT is
chargeable but no Octroi duty is
payable , rate for same under LBT
will be 0%
Exemptions/Deductions

Registration Details
o Person registered under MVAT within Municipal
jurisdiction is deemed to be registered under LBT-
No need of separate registration under LBT. LBT
Certificate will be issued directly without any
procedure.
o However person who is registered under MVAT
outside Municipal jurisdiction but carrying out
business activities within Municipal jurisdiction
required to get registered under LBT separately.
o Every person to whom LBT is applicable is
required to apply for registration within 30 days in
Form A as issued by the State Govt for said
purpose.

1. PAN Card
2. Residence Proof of Dealer
3. Address proof of Place of Business
4.Copy of Shop Act Shop Act License
5.Copy of VAT registration Certificate
6. 2 Photographs of Dealer /Authorized Person
7. In case of Company or Partnership Firm, names
of partners and directors are to be mentioned in
the form and affidavit shall be submitted within 3
months from the date of application.
Required Documents

Consequences of Non
Registration
1.For non registration of a person or
2. Person who is not registered but showing as
registered
3.Submitting falsified returns
4.Submitting falsified documents for registration
5.Providing incorrect information in accounts
6.And person who trying to evade tax, etc.
-will be liable for a penalties from one
times to five times of the amount involved.

Payment Options
 By Cash
 Demand Draft
 Pay order
 Cheques
 Online payment using debit/credit
cards, Net Banking or by RTGS/NEFT**
**(This facility is not available currently but
will be available soon)

Period of Payment
Every person to whom LBT is applicable is required to pay LBT every
month.
Interest for late payment will be @ 2% per month.
1. April --20thMay
2. May --20thJune
3. June --20thJuly
4. July --20thAugust

Maintenance Of Register
 Register should be chronologically maintained
 Full name & style of Business
 Address of the Business place
 LBT Registration Certificate Number
 Purchase Value of Goods/ Processing Charges
 LBT Payable
 Entry of goods to be as per date of receipt in City
 Record for 10 Years.

Refund of LBT
• In case of excess payment of LBT trader required to apply for refund.
• In one month LBT application will be processed and within one
month refundwill be issued.
• If it is not issued within two month from date of application , refund
will be issued with interest .
• 90% of the eligible amount will be refunded in case of Export of
Goods.
• For regular exporter option of payment of LBT @10% of applicable
rate.
• Goods Imported and exported in same calendar month shall be
eligible for set-off of refund due in next month’s liability.

LBT on Stock Transfer
Replacement of products under warrantee in another city
limit. -LBT will be payable in that City Limit.
Taking back old parts for repairs-LBT will be payable in City
Limit where it is imported.
Importing of goods in City limit for some function or sports
activity or presentations even for a day will attract LBT.
Office of the Dealer is in City and Godown is outside, then
when goods are taken in City Limits, LBT will be
applicable.

Calculation Example
Goods imported into NMC limits worth Rs. 10000/-as on
15thApril 2013
(Applicable VAT Rate –12.5% and LBT -2%)
Value of Goods Rs. 10000/-
Add: VAT @ 12.5% Rs. 1250/-
-----------------------------
Sub-Total Rs.11250/-
Purchaser is required to pay LBT @ 2% on Rs.11250/-i.e. equal to pay
Rs.225/-in Challan
Note: LBT Rate is assumed to be 2%.

Protest Of LBT
• The Municipal Corporation is appointed to keep a check
on LBT collection. At a time when the whole world is
becoming paperless with LBT, traders, manufacturers and
other shopkeepers have to undergo more paperwork and
hand over financial statements to the municipal
corporation from time to time.
• So now, with the introduction of LBT, most traders will end
up giving indirect bribe to one more babu.

Advantages of LOCAL BODY TAX
over Octroi
Traceability of transactions
Better codified taxation structure
Compatible with account-based tax
collection mechanism
Comparatively less prone to manipulation
Uniformity in taxation across the State
Reduction in the physical burden of paying
of taxes at the check-nakas

Local Body Tax (LBT)

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Local Body Tax (LBT)