The draconian LBT explained

Local Body Tax (LBT) is a draconian Act, especially with key words like ‘goods’, ‘dealer’, ‘business’ loosely defined in the legislature, giving enough scope for the administrators to stretch their imagination to fanciful limits to the common man’s harassment and dismay

At the time of introduction of VAT in 2005 the Government of Maharashtra had promised that Octroi would be removed and there will not be any additional tax burden on citizens but now they have introduced  the LBT. Thus, LBT is not a good system of tax collection suited for the 21st century, and when there are many other better options available with the government.

Your dabbawala gets your tiffin box daily to your office in Fort area from your house in Thane. As the financial year comes to an end, one fine day, after December, a LBT officer lands in your office instead of the dabbawala with a warrant to arrest you for having brought into the city limits the goods exceeding the prescribed turnover limits.

Another point against LBT is the cascading effect of LBT. Unlike excise or service tax or VAT, there is no concept of set-off or input credit.

Click Here to read the full article by ANANTHRAM RAO, partner at Borkar & Shenoy, Chartered Accountants

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