The financial issues concerning local bodies and Panchayti Raj institutions assume significance as the proposed GST will subsume all local levies and octroi in addition to excise tax, service tax and sales tax.
Fearing loss of octroi income after GST is implemented, Mumbai Municipal Corporation officials today suggested that it should be made mandatory for state governments to compensate local bodies for their loss as the new indirect tax regime is rolled out.
The Corporation representatives made the suggestion to a Select Committee of the Rajya Sabha on the 122nd Constitution Amendment Bill for rolling out of the Goods and Services Tax (GST). The committee will meet next on June 16.
Presentations were also made to the Committee on various aspects of the GST by the Ministry of Urban Development and Ministry of Panchayti Raj, sources said. The Finance Ministry officials were present at the meeting.
The financial issues concerning local bodies and Panchayti Raj institutions assume significance as the proposed GST will subsume all local levies and octroi in addition to excise tax, service tax and sales tax.
According to sources, some permanent arrangement will have to made to compensate the local bodies which will not be able to collect octroi and entry tax under the new regime.
Members of the committee, sources said, will visit Chennai, Kolkata and Mumbai in the third week of June to elicit views of different stakeholders on GST.
The committee is scheduled to submit its report at the beginning of the next session of Parliament. The government is keen to implement the GST from April 1, 2016.
Although the Constitution Amendment Bill to roll out the GST was passed by the Lok Sabha, it got stuck in the Rajya Sabha where the ruling NDA does not have a majority.
The opposition forced the government to refer the bill to the select committee of the House for further scrutiny.
The 21-member Select Committee on the GST bill is headed by BJP member Bhupender Yadav. Other members of the committee include Chandan Mitra, D Raja, K C Tyagi, Naresh Agarwal and S C Misra.
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