For Rs7,000cr octroi loss, BMC seeks annual hike of 8% in compensation

MUMBAI: With the BMC set to lose its biggest source of revenue—octroi—owing to the implementation of the Goods and Services Tax (GST), it has demanded a minimum 8% annual hike in compensation for the first five years. The civic body earns around Rs 7,000 crore from octroi every year, which it won’t be able to collect once GST is implemented. Owing to the decline in crude price by 36% in 2014-15 and 32% in 2015-16, revenue collection is Rs 7,000 crore; otherwise it would be over Rs 8,000 crore.
Civic officials said that while GST is a welcome move, they want to be assured of an automatic deliverance of compensation—a fixed amount during the first five years of implementation. Additional municipal commissioner Dr Sanjay Mukherjee said, “The BMC has already communicated its concerns to the Centre and the state government. We are keen that our quantum of revenue be protected and devolution of compensation for us to be automatic. We hope that the increase is 8% per annum.”
The BMC plans to move all its officers from the octroi department to the assessment department. “Three years ago, we stopped filling posts in the assessment department,” said an official. Opposing GST, mayor Snehal Ambekar (Shiv Sena) has demanded that Mumbai be exempted for better development. In Parliament, Sena MPs Anil Desai and Sanjay Raut had said GST may not be in the BMC’s interests. They felt that revenue will flow to the Centre, which will devolve it to the state, which will then pass it on to the BMC; they said the timing of fund disbursement would critically hamper Mumbai's projects and daily life.