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Maharashtra Government has replaced Octroi with Local Body Tax. Octroi was charged on
the prices of materials but Local Body Tax will be levied on the total turnover.
Octroi is a percentage tax levied on the entry of goods into the city, while local body tax is a
lump-sum amount charged on the value of the goods. While octroi is collected in cash on a
daily basis, the local body tax is payable by the person within 40 days of bringing goods into
the city.
The government is favouring local body tax as it feels that this step would remove the
rampant corruption prevailing in the state because there would be no need to employ
contractors to collect octroi. However, it is being argued that if local body tax is
implemented in lieu of octroi, the daily flow of money would stop and instead the money
would come in the form of tax after 40 days. Thus development works would suffer
In the newly introduced local body tax, a lump sum amount has to be paid by the traders or
the manufacturers or the owner of the goods within the specified time limit.
References:
http://articles.timesofindia.indiatimes.com/2012-06-19/nashik/32317026_1_octroi-slabs-total-turnover
http://www.dnaindia.com/money/report_maharashtra-corporators-challenge-local-body-tax-in-lieu-of-
octroi_1735729