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{{Short description|City-level tax in India}}
{{Use dmy dates|date=April 2016}}
{{Use Indian English|date=April 2016}}

'''Local Body Tax''', popularly known by its abbreviation as '''LBT''', is the tax imposed by the [[Municipalities of India|local civic bodies]] of [[India]] on the entry of goods into a local area for consumption, use or sale therein.<ref name=What>{{cite web | url=http://www.amazingmaharashtra.com/2011/07/local-body-tax-registration-form.html | title=What is Local Body Tax? | work=[[Amazing Maharashtra]] | date=29 July 2011 | author=Mhatre, Shridhar}}</ref> The tax is imposed based on the Entry 52 of the [[State List]] from the Schedule VII of the [[Constitution of India]] which reads; ''"Taxes on the entry of goods into a local area for consumption, use or sale therein."''<ref>{{cite web | url=http://www.moneylife.in/article/the-draconian-lbt-local-body-tax-explained/32653.html | title=The draconian LBT: Local Body Tax explained | work=Money Life | date=13 May 2013 | accessdate=14 May 2013 | author=Rao, Ananthram}}</ref> The tax is to be paid by the trader to the civic bodies and the rules and regulations of these vary amongst [[States and territories of India|different States in India]]. The LBT is now partially abolished as of August 1, 2015.<ref>{{cite news | url= http://indianexpress.com/article/india/maharashtra/lbt-all-but-abolished-states-kitty-poorer/ | title= LBT all but abolished, state's kitty poorer | newspaper= [[The Indian Express|Indian Express]] | date= August 1, 2015 | accessdate= 2015-08-01 | author= Express News Service}}</ref>

==History and implementation==
The tax supersedes the "[[octroi]]" and "Cess" system of taxing. The octroi system, which originates from the [[Ancient Rome|ancient Roman times]], levied tax on the goods while they entered the limits of the civic body. In it, the trucks or goods carriers had to pay tax while they entered the city limits at the octroi check posts. {{As of|2013}}, the Indian state of [[Maharashtra]] and one state in the [[Northeast Africa]]n country of [[Ethiopia]] are the only known regions to impose octroi.<ref name=Chavan>{{cite news | url=http://www.business-standard.com/article/pti-stories/maha-to-scrap-octroi-this-year-expand-ambit-of-lbt-chavan-113031800340_1.html | title=Maha to scrap octroi this year, expand ambit of LBT: Chavan | newspaper=[[Business Standard]] | date=18 March 2013 | accessdate=14 May 2013}}</ref> The system was in practice in Maharashtra since 1965.<ref name=Welcome>{{cite news | url=http://www.thehindubusinessline.com/features/taxation-and-accounts/goodbye-to-octroi-but-no-welcome-for-lbt/article4706524.ece | title=Goodbye to octroi, but no welcome for LBT | newspaper=[[The Hindu]] | date=12 May 2013 | accessdate=14 May 2013 | author=Veera, Heetesh |last2=Shah |first2=Abhishek}}</ref> In March 2013, in a joint session of the [[Maharashtra Legislative Assembly]] and the [[Maharashtra Legislative Council]], the [[Chief Minister of Maharashtra]] [[Prithviraj Chavan]] announced that the [[octroi]] and cess will be cancelled and LBT would be levied in the municipalities of [[Mumbai]], [[Thane]], [[Pune]], [[Nagpur]] and [[Pimpri-Chinchwad]] in the same year. The LBT was in action in other 20 municipalities at that time.<ref name=Chavan/> Other municipalities implemented LBT effective from 1 April 2013 and Mumbai was planned to implement from 1 October 2013.<ref name=Welcome/> The law for the same had been passed in 2009 and rules for implementation in various regions had to be drafted. Chavan noted in an interview that with LBT, the free flow of goods will be possible which was hindered by the octroi collection at the check posts.<ref name="Interview">{{cite news | url=http://www.business-standard.com/article/economy-policy/local-body-tax-is-faith-based-govt-expects-truthful-accounts-of-imports-prithviraj-chavan-113051300220_1.html | title=Local body tax is faith-based; govt expects truthful accounts of imports: Prithviraj Chavan | newspaper=[[Business Standard]] | date=14 May 2013 | accessdate=14 May 2013 | author=Jog, Sanjay}}</ref>

==Nature==
The tax is to be paid by a registered trader within 40 days. As per the rules, every trader whose annual turnover of purchase and sales of the goods included in the taxable schedule is not less than {{INR}}5000 and if the annual turnover of purchase and sales of all the goods is not less than {{INR}}1,00,000 (one [[lakh]]) is supposed to be registered with the local civic body i.e. municipality. The payment of the tax is to be done by the trader through an online portal, cheque, demand draft or by cash to a designated bank account or special counters opened for the same by the civic bodies.<ref name=What/>

Additionally, some concessions are defined. For example, when LBT-paid goods are exported outside the city, a 90% of the paid LBT can be refunded based on some conditions. There are also concessions on goods that are imported again after they were sent out for certain processing or outside India.<ref name=Welcome/>

With implementation of LBT, dealers are supposed to maintain their records of business and file half-yearly returns. The registration number assigned by the civic body also has to be included in the bill or invoice. The traders have to maintain the records for 10 years.<ref name=Welcome/>

In case of delayed or non-payment of LBT, or failure to register, or failure to present bill/invoice/other records, or failure to state correct liability, various penalties are charged.<ref name=Welcome/>

==Where is LBT Applicable==

===Gujarat===
LBT is not levied upon in the state of [[Gujarat]]. The octroi was cancelled in 2007 and to compensate that, [[Value-added taxation in India|Value Added Tax (VAT)]] was increased. However, {{as of|2013|April|lc=y}}, [[Ahmedabad Municipal Corporation]] (AMC) was planning to add on a separate LBT apart from the current VAT structure.<ref>{{cite news | url=http://www.dnaindia.com/ahmedabad/1824792/report-new-tax-will-lead-to-more-paper-work-and-increase-cost | title=New tax will lead to more paper work & increase cost | newspaper=[[Daily News and Analysis]] | date=20 April 2013 | place= Ahmedabad | accessdate=15 May 2013 | author=Dave, Jitendra}}</ref><ref>{{cite news | url=http://www.indianexpress.com/news/decision-to-replace-octroi-with-lbt-a-betrayal-says-fadnavis/1107313/ | title=Decision to replace octroi with LBT a betrayal, says Fadnavis | newspaper=[[Indian Express]] | date=25 April 2013 | accessdate=15 May 2013}}</ref>

===Maharashtra===
LBT was introduced in [[Maharashtra]] in a phased manner. LBT was introduced in the year 2010 in Tier III cities. In 2013 it was made applicable to tier II and I cities. The table below shows where LBT was applicable and from when.
{| class="wikitable sortable"
|-
! Municipal Corporation !! LBT made applicable
|-
| [[Thane Municipal Corporation|Thane]] || 01-04-2013<ref>{{cite web | url= http://www.lbtthane.blogspot.com/2013/04/is-lbt-applicable-in-thane.html | title= LBT Applicability in Thane | publisher= Adi Publication | date=1 April 2013 | accessdate = 28 June 2013 |last = Madrecha | first = Adarsh | authorlink = Adarsh Madrecha}}</ref>
|-
| [[Bhiwandi-Nizampur Municipal Corporation|Bhiwandi]] || 22-05-2013<ref>{{cite web | url= http://lbtthane.blogspot.com/p/lbt-corporations.html | title= LBT Corporations | publisher= Adi Publication | date=1 April 2014 | accessdate = 2014-12-01 |last = Madrecha | first = Adarsh | authorlink = Adarsh Madrecha}}</ref>
|-
| [[Pune Municipal Corporation|Pune]] || 01-04-2013<ref>{{cite web | url= http://lbtthane.blogspot.com/p/pune.html | title= LBT Pune | publisher= Adi Publication | date=1 April 2014 | accessdate = 2014-12-01 |last = Madrecha | first = Adarsh | authorlink = Adarsh Madrecha}}</ref>
|-
| [[Nagpur Municipal Corporation|Nagpur]] || 01-04-2013 <ref>{{cite web | url= http://lbtthane.blogspot.com/p/nagpur.html | title= LBT Nagpur | publisher= Adi Publication | date=1 April 2014 | accessdate = 2014-12-01 |last = Madrecha | first = Adarsh | authorlink = Adarsh Madrecha}}</ref>
|}

The LBT stands cancelled as of August 1, 2015 in Maharashtra for most traders.<ref>{{cite news | url= https://timesofindia.indiatimes.com/business/india-business/LBT-abolished-for-most-traders-in-Maharashtra/articleshow/48309819.cms | title= LBT abolished for most traders in Maharashtra | newspaper= [[The Times Of India|Times of India]] | date= August 1, 2015 | access-date= August 2, 2015 | author= PTI| author-link= Press Trust of India }}</ref>

==Amnesty Scheme==
Maharashtra State Government has issued notification on 3 June 2015 starting Amnesty Scheme for LBT.<ref>{{cite web
|url = http://lbtthane.blogspot.in/2015/06/lbt-amnesty-scheme-in-detail.html|title = LBT Amnesty Scheme Notification|last = Madrecha|first = Adarsh|date = 2015-06-03|website=lbtthane.blogspot.com|publisher = Adi Publication|accessdate = 2015-06-03}}</ref>

==Protests==
[[File:LBT bandh, Thane East 01.JPG|thumb|Shops in Thane East remained closed in protest.]]
After the introduction of LBT in March 2013, various protests were organized by the trader's associations in various cities in India, mostly [[Maharashtra]]. The traders protested for the fear that such law would increase harassment and corruption from local authorities. This tax was also noted as extraneous while [[Value-added taxation in India|Value Added Tax (VAT)]] was still under implementation.<ref>{{cite web | url=http://www.indiainfoline.com/PersonalFinance/Articles/What-is-local-body-tax-Why-are-traders-protesting/43014587 | title=What is local body tax? Why are traders protesting? | work=India Infoline | date=14 May 2013 | accessdate=14 May 2013}}</ref>{{ref|1|[Note I]}} Proposals were also made to increase VAT instead of adding this extra tax. However the same was quashed by the government as it would mean that the money collected by state government through VAT would have to be transferred to civic bodies in form of grant.<ref name=Interview/> In 2014, the LBT was abolished and octroi reestablished.<ref>{{Cite news |work=Times of India |date=9 June 2014 |url=http://timesofindia.indiatimes.com/city/nagpur/Octroi-to-replace-local-body-tax-next-week/articleshow/36262057.cms |title=Octroi to replace local body tax next week}}</ref>

==References==
{{Reflist|2}}


[[Category:Taxation in India]]
[[Category:Local taxation]]
[[Category:Local government in India]]
[[Category:Local government in Maharashtra]]
[[Category:Economy of Maharashtra]]

Local Body Tax - Revision history

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