The Octroi tax has been one of the most important earning sources for the BMC. With the GST to be implemented latest by 16th September, no octroi will be levied in Mumbai. This information was shared by the BMC commissioner Ajoy Mehta.
The expected collection from octroi for this financial year was expected to be around 7,000 Cr, but the BMC has already earned 6,546 Cr till February end. As the GST will be implemented latest by 16th September, the BMC will collect octroi from April-June which is expected to be around 1500 Cr while the GST compensation will be provided for the next 9 months will be 5,883.75 Cr. But Ajoy Mehta clarified that the compensation will be extended up to 5 years only.
Due to this development, major capital expenditure on octroi nakas has already been reduced. The BMC will have to come up with alternative sources of income to compensate for the octroi revenue.
This will be a major sustainability challenge for the BMC. The other alternative suggested is a professional tax, but the BMC is not yet authorised to levy such taxes.
Ajoy Mehta said that the BMC has sent certain recommendations in this regard to the state government, and if agreed upon, the BMC will be able to raise an additional revenue of 3000 Cr.