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Mangal Prabhat Lodha's speech at the Maharashtra legislative assembly
Shri Mangal Prabhat Lodha, MP (Malabar Hill) – Speech at the Maharashtra Legislative Assembly
Read it on: Times of India

Hon. Speaker, Sir, I would like to present my views on the recently concluded Interim Budget for the period of 2009 – 2010. Hon. Speaker, Sir, I would like to speak on two to three issues with respect to the Metropolitan Development Authority and the Ministry of Industry.

Hon. Speaker, Sir, when the government had implemented the Value Added Tax (VAT), industrialists and traders in Maharashtra had objected strongly to this imposition, and presented a case to the government stating that the implementation of VAT, in addition to the octroi already in place had resulted in a regime of double taxation, and was hurting their businesses. At that time, the government had promised that after the implementation of VAT, octroi charges would be withdrawn. Several years have passed since then, yet the government has not made any decision to put in effect this promise. It is the plea of traders that the government reaches an immediate decision on the withdrawal of octroi charges. Today, it is only in Mumbai that octroi charges are still levied, as octroi has been withdrawn across all other locations in India. On one hand, there is ample discussion on further industrialization and creation of job opportunities in the state, yet on the other, the octroi which was due to be withdrawn is still in effect. As a result of this, we are losing out on potential business to other states.

It is my sincere request to the Hon. Chief Minister that an immediate decision be taken regarding this issue. In the interim, may I suggest the imposition of a certain amount of cess on the VAT itself, and that the payment of this cess be made directly to the municipality, so that whatever losses the municipal authorities may incur with the withdrawal of octroi can be covered to an extent by the amount collected via this cess. If such a move is made, industrialists and traders stand to benefit greatly. This move would also instill further faith in the government in the minds of the people. Therefore, I urge you to bring this matter to a suitable closure at the earliest.

In addition to this, I would also like to advise that during the process of withdrawal of octroi charges, the toll gates where the octroi is collected also be shut down, as these are widely alleged to be havens of corruption. It is not unknown, in a case where the octroi amount is Rs. 10, 000, the officials responsible for collecting the amount charge a bribe of Rs. 3000, and state a payment of Rs. 2000 towards octroi charges, thereby incurring the state, a loss of Rs. 5000. If the octroi toll gates are shut down, rest assured that the net collection of the government will increase.

Here, I would also like to advise that while the octroi regime is still in force, an account-based octroi system should be put in place. Such a move will remove the fears of an 'Inspector Raj' from the minds of traders and merchants – especially the fears of raids and imposition of penalties, and causing general disturbance to the businesses of these traders.

It is my request to the Hon. Chief Minister that immediate decisions be taken with regard to the removal of octroi charges. I would request that before the conclusion of this session, a meeting be held to discuss and conclude on the withdrawal of octroi imposition in the state of Maharashtra.

Few more pointers

Please find mentioned below the pointers which will help you understand the matter,

  • Maharashtra VAT when implemented had drawn strong opposition from Industrialists and traders, as Octroi and MVAT would lead to double taxation.

  • Government of Maharashtra had promised to scrap Octroi after implementation of MVAT. But even after so many years nothing has been done.

  • Everyone is demanding that the government should act quickly and scrap Octroi Tax.

  • On one hand Maharashtra government is talking of Industrialisation and creation of job opportunities in Maharashtra on the other hand it has still not scrapped Octroi, due to which all the industries and businesses are moving out of Maharashtra state.

  • As a temporary measure, the government can add an additional cess to MVAT and this cess amount may directly be diverted to the MCGM. This will help MCGM minimize it's loss in tax collection due to scrapping of Octroi.

  • This will give a lot of relief to people, businessmen and traders and will help boost government image.

  • Also scrapping of Octroi will help eradicate the corruption at all the Octroi check nakas. For eg. Where a person has to pay Rs. 10000 as Octroi. He can get away by paying the concerned officer a bribe of Rs. 3000; in return the officer makes an Octroi challan of Rs. 2000. Thus the government is at a loss of Rs. 8000.

  • Closing of such Octroi check nakas will help in filling the government treasury.

Another option could be introducing an account based Octroi system. In this system various inspectors would carry out routine checks and would penalise the offenders.

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