The civic body has decided to go slow on big projects that require hefty monetary provisions, thanks to ambiguity over sharing of revenue under the goods and services tax (GST) regime. This may reflect in the corporation's budget for financial year 2015-16.
What is centre's plan
A simplified tax structure for the business community in mind, the Narendra Modi-led government is planning to introduce GST, which will replace octroi and local body tax, across the country from 2016. A bill to this regard is already pending before the Parliament. However, the Brihanmumbai Municipal Corporation (BMC) has chosen to tread cautiously and focus on completing work on existing projects till then.
Why is BMC apprehensive of GST?
BMC officials said it is not clear who will get what once GST comes into force. "Under the new system, local bodies are likely to lose their rights to collect tax directly and instead, it is the state government which will garner revenue. The municipalities will have to depend on the state government for their share of GST revenue. So, we are not aware right now what the revenue share model is for BMC. Hence, no future projects requiring funds are being envisaged," a senior civic official said, requesting anonymity.
What is behind this mistrust?
The official said that given the past record of government not clearing dues of BMC for years, projects to be undertaken by the civic body in future may get affected. "The state government is yet to clear over Rs2,500 crore of the BMC. Despite repeated reminders, nothing has come out. What if the same thing happens in case of GST?"
How much does BMC earn through octroi?
The municipal corporation expects to collect majority of its revenue through the existing system of octroi, estimated to be around Rs 7300 crore. It has allotted Rs8,113 crore as capital expenditure – funds meant for carrying out developmental works. The official said there is some hope for Mumbai as the same BJP-Sena alliance is at the helm of power both at the state and BMC. "Release of funds from the state government's end should happen without much friction."
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