LOCAL BODY TAX (LBT)

What is LBT? 

It’s a tax that traders will pay the local civic body for importing goods into the city. Sounds similar to octroi? Octroi, abolished in almost all municipalities in state, is paid every time a consignment enters the city, at octroi nakas. LBT attempts to speed up goods movement, stressing self-declaration of goods by traders who will maintain LBT accounts.

But why are they protesting if LBT is merely replacing octroi? 
The traders’ contention is that octroi abolition and imposition of LBT simultaneously is a betrayal. With VAT in place across the country, a double-tax regime is not acceptable, they say. Prices of goods are affected by VAT as well as by state or municipality-level taxes.
Also, complying with various rules on self-declaration, record maintenance, account books, etc could be an added cost under the LBT regime. Government sources say tax evasion under the octroi regime was simpler, another reason traders are opposing LBT.

Have all Maharashtra municipalities imposed the tax? 
Out of the 26 corporations, 24 have migrated to LBT. Mumbai and Nashik will do so later this year.

Content Reference 

1.Applicability                          2.Persons Covered
3.Rates Applicable                     4.Registration Process
5.Registers to be Maintained           6.Consequences of Non Reg.
7.Periodicity of Returns                 8.Period of Payment
9.Refund Process                      10.Important Points
11.Respective Forms                   12.Example for reference

Applicability

Applicable from 01/04/2013

Applicable to following types of trades

1. Importer ( Person importing goods from outside the Municipal Limits into Municipal Limits)

    a. Turnover of goods(Purchased/sold) specified in Schedule A is more than or equal to Rs.5000/- and

    b. Turnover of all goods imported is more than or equal to Rs.5000/- and

    c. Turnover of all goods is

                i. in case of corporations having population more than or equal to 20 Lakhs, turnover    

                is more than or

                   equal to Rs. 300000/- in a year and

                ii. In other corporations if turnover is more than or equal to Rs. 100000/- in a year

               (ALL ABOVE MENTIONED CONDITIONS NEED TO BE SATISFIED)

2. In other cases

    a. Turnover of Goods specified in list provided in LBT Rules is  more than or equal to  

          Rs.5000/- 

    b. Turnover of all goods is

        i. In case of Corporation having population more than or equal to 20Lakhs , if turnover is  

           more than or equal       

           to Rs. 400000/- in a year and 

        ii. In other corporations if turnover is more than or equal to Rs. 150000/- in a year.

        (BOTH THE CONDITIONS NEED TO BE SATISFIED) 

3. If person carrying business in Local limits on Temporary basis . He is also required to take  

    the registration   under LBT.  27/04/13 

Persons Covered- 
Both Vat and Non-Vat Dealers Persons Covered- Both Vat and Non-Vat Dealers

  • 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.)

Rates Applicable

.Turnover of Purchases and Applicable  LBT

a. 1 Lakh to 2 Lakh . Tax Rs. 4000/-

b. 2 Lakh to 3 Lakh . Tax Rs. 6000/-

c. 3 Lakh to 4 Lakh . Tax Rs. 8000/-

d. 4 Lakh to 5 Lakh . Tax Rs. 10000/-

e. 5 Lakh to 6 Lakh . Tax Rs. 12000/-

f. 6 Lakh to 7 Lakh . Tax Rs. 14000/-

g. 7 Lakh to 8 Lakh . Tax Rs. 16000/-

h. 8 Lakh to 9 Lakh . Tax Rs. 18000/-

i. 9 Lakh to 10 Lakh . Tax Rs. 20000/-

10. Above Rs. 10 lakhs Rate is specified in Schedule A according to the goods.

.Dealers opting for above scheme, NEED NOT to file returns .13.How to Calculate LBT

Rates Applicable for Builders 

.Another alternative is available for builders and contractor who undertake  the  work of  construction can pay LBT on lump sum basis in following way: 

   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. OR   

 paying tax @ 0.25% of their total contract value. 

For On Going Contracts as on 1.4.13, normal taxation (Commodity wise) is advised in absence of clarity.   

Registration 

.How to Register 

 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. 

    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. 

 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. 

 Registration Process 

Documents Required for Registration  

  1. PAN Card 

  2. Residence Proof of Dealer 

  3. Address proof of Place of Business 

  4.Copy of Shop Act Shop Act License 

  5.Copy of VAT registration Certificate 

  6.2 Photographs of Dealer /Authorized Person 

  7. 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. 

 Note: The process of registration will start online from 15th March 2013. And documents are need  to be submitted at Octroi Dept  Near PMC. 

 Register to be Maintained 

 Every trader to whom LBT is applicable is required to maintain following details as required by State Government in Form D also required other details  

 1. Name and Address of the Vendor 

 2. Vendors LBT Reg. No. 

 3. Commodity 

 4. Purchase Value of Goods/ Processing Charges 

 5. LBT Payable 

  Form D (purchases and receipt of goods Register)can be maintained in Computerized format. Dealer maintaining register in Computerized format is required to produce documents maintained under VAT on demand to Commissioner.

Note-  1. Register should be chronologically maintained  

2. Entry of goods to be as per date of receipt in City  

3. Incorporate the details of purchase/import viz-        

      a. Invoice No and Date        

       b. Name and Address of selling dealer        

       c. Local RD and RC no. (If any) Else place from where goods are moved  for sale by selling dealer     

       d. Purchase price in case of Branch transfer i.e. Value of Goods. 


Consequences of Non registration
1.For non registration of a person or
2. Person who is not registered but showing as registered
3.Submitting falsified returns
4.Submitting falsified documents for registration
5.Providing incorrect information in accounts
6.And person who trying to evade tax, etc.

 - will be liable for a penalties from one times to five themes of the amount involved.

Periodicity for Return
Every person to whom LBT is applicable is required to submit returns in form E-I   six-monthly for first half year and in form E II for the year. Even though it is nil. Penalty for non filling of  Return penalty is Rs.5000/- per return.
      
             Period                                                 Date of Filling Return

1  April to September   E-I                             Before 15th Oct

2  April to March       E-II                                  Before 15th April


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.

Month  .             Date of Payment

1. April            .    20th May
2. May             .    20th June
3. June           .     20th July
4. July             .     20th August
5.August         .     20th Sept.
6. Sept           .     20th Oct
7. Oct             .     20th Nov
8. Nov            .     20th Dec
9. Dec           .     20th Jan
10. Jan          .     20th Feb
11. Feb         .     20th March
12. March     .     20th  April


Period of Payment

Registered dealer whose turnover of all purchases is less than Rs. 10 lakhs  can opt for a payment of lump sum amount of LBT subject to condition specified in Rule 27. Persons opting for such scheme are not required to file Returns.
For this facility person is required to furnish a declaration in Form R to Commissioner.


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 next one month refund will 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.

Eg.  1.Date of Application for refund   :  01/04/2013
        2. Date of Process of Application  : before 30/04/2013
        3. Date of Issue of Refund : before 31/05/2013
        4. Not issued before 31/05/2013 : Interest from 31/05/2013 will be issued.


Important Points
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%
Respective forms
Form A    . Application for Registration
Form D   . Purchase Register or Register of Goods
Form E-I . Return Cum Challan (Half Yearly return )
Form E II. Form of Annual Return.
Form R . Declaration for permission to pay lump sum amount of LBT.
Example with Calculation (LBT is applicable on all taxes as well) Example with Calculation (LBT is applicable on all taxes as well)
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Contact Details : Industrial Accounting & Taxation Training 

                         AIAT Pvt. Ltd. ,Plot No.15 Bhande Plot Umred Road, Nagpur-440024

                                             Mob. 91+9373104022    www.aiatindia.com

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