local body tax (lbt)

LOCAL BODY TAX

PRESENTED BY -Bhushan GangShraddha ChandwadkarChetan LoharRupesh Gayakhe Pranali KuteAjit ChaudhariHarshada ChaudhariAbhay Singh

CONTENTS

o Introduction of LBTo History (origin of LBT)o Rates Applicableo Protest By Peopleo Advantages of LBTo Exemptiono Registration Detailso Payment Optionso Maintenance Of Registero Refund of LBTo LBT on Stock Transfero Protest Of LBTo 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 criteria is satisfied.)

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 ?

All the traders will have to keep a complete list of all the goods produced within a month in software provided by civic body. It will check their LOCAL BODY TAX liability.

The payment will have to be made once in 40 days through online portals, cheque, demand draft, or cash through a designated bank or counters of the civic bodies.

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/-


6,000/-


8,000/-


10,000/-


12,000/-


14,000/-


16,000/-


18,000/-


20,000/-

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. ORpaying 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 Card2. Residence Proof of Dealer3. Address proof of Place of Business4.Copy of Shop Act Shop Act License5.Copy of VAT registration Certificate6. 2 Photographs of Dealer /Authorized Person7. 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 or2. Person who is not registered but showing as registered3.Submitting falsified returns4.Submitting falsified documents for registration5.Providing incorrect information in accounts6.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 --20thMay2. May --20thJune3. June --20thJuly4. 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 transactionsBetter codified taxation structureCompatible with account-based tax

collection mechanismComparatively less prone to

manipulationUniformity in taxation across the StateReduction in the physical burden of

paying of taxes at the check-nakas

THANK-YOU

local body tax (lbt)

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