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Our Bureau

Mumbai , April 29

THE Maharashtra Government is planning to review octroi in the State. Proposals for reviewing octroi are actively being considered by the departments of Urban Development and Finance.

The Government will clarify its position on the issue by August, said Mr Jayant Patil, Minster for Finance, while addressing the media in the Secretariat.

Octroi has been in force in Maharashtra for many years and all municipalities levy it on entry of goods and is a major source of revenue for municipalities.

The Municipal Corporation of Greater Mumbai (MCGM) alone collected Rs 2,504 crore as octroi in 2004-05, up from Rs 2,240 in 2003-04.

It constitutes about 33 per cent of MCGM's annual budget and it has a 4,500-strong assessment and collection department.

Speaking to Business Line, Mr Sachin Menon, taxation expert and partner, Ernst & Young, said octroi review has been in the offing for many years but no steps had been taken till date.

"If Maharashtra scraps octroi then it would race ahead of all other States. Business suffers as goods laden trucks take a lot of time to clear at the collection centres. Even if octroi were to remain, it should not be collect manually at check posts. It could be clubbed with the sales tax and collected," Mr Menon said.

Industry sees octroi as a spanner in the wheel for business.

Revenue loss could be stemmed by the abolition of octroi. High octroi in the last five years has led to the flight of capital from Mumbai.

According to Mr Jayant Lapsia, President of All-India Liquid Bulk Import Export Association, abolition of octroi would work as a propeller for business especially at Mumbai port that has been losing business for the last couple of years due to sharp rise in octroi charges.

"In the past, customs duty was 200 per cent and so was octroi. Now the custom duty has been reduced to 10 per cent whereas octroi has remained the same. Abolition of octroi would lead to loss of a couple of thousand crore rupees, but the business generated by this process would be ten times more," Mr Lapsia said.

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