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  Metros   Mumbai  21 May 2017  Three state GST bills cleared

Three state GST bills cleared

Published : May 21, 2017, 1:40 am IST
Updated : May 21, 2017, 1:40 am IST

Local bodies will be compensated for the resultant revenue loss.

Sudhir Mungantiwar
 Sudhir Mungantiwar

Mumbai: Claiming that Maharashtra’s growth rate would increase by 1.5 to 2 per cent after introducing the Goods and Services Tax (GST), the Maharashtra Assembly on Saturday passed the Maharashtra Goods and Services Tax (Compensation to the Local Authorities) Act 2017. Finance minister Sudhir Mungantiwar said that performance indicators would be introduced in the Act and local bodies would have to meet these parameters to get funds. He assured local bodies of compensation for losing their revenue after implementation of the GST. Also, the government passed another bill to repeal some Acts that would become redundant after the GST’s introduction.

Mr Mungantiwar, who introduced the Act in the Assembly, said that MLAs’ concerns and worries about its implementation would be addressed. “The state’s growth rate will increase by 1.5 to 2 per cent after GST comes into play. The local bodies will not lack funds and their financial autonomy will remain intact. The Centre will give compensation to states every two months, but Maharashtra is committed to giving compensation to local bodies before the fifth day of every month, ensuring smooth functioning. The government will give compensation at eight per cent of the compounded rate to the Brihanmumbai Municipal Corporation (BMC) and other local bodies,” Mr Mungantiwar said.


As per the Act, the financial year 2016-17 would be taken as the base year for the purpose of calculating the compensation. “The projected nominal growth rate of revenue subsumed for the BMC and the other local authorities shall be at the compounded rate of eight per cent per annum, the Act says.

According to the Act, as octroi and local body tax are important sources of revenue for the local authorities including BMC, “it has become necessary to compensate them for the loss on account of deletion of the entry relating to octroi, local body tax, entry tax etc. Several statutory functions that include water supply and sanitation, urban planning, street lightning, roads and storm water drains, running public hospitals and dispensaries, maintenance of markets, solid waste management, etc, are performed by local authorities through revenues generated by way of octroi or as the case may be, local body tax.”

Making a special mention for the BMC, the Act says, “(Mumbai) being an important financial, commercial and entertainment capital of the country, it is essential to ensure its financial security so that it continues to discharge its statutory obligations of providing all civic services without any hindrance. At the same time it is necessary to provide a mechanism by providing bank guarantees so that the financial autonomy of BMC is not compromised.”

Taking a dig at the Bharatiya Janata Party and Shiv Sena, Nationalist Congress Party leader Jayant Patil asked why Mr Mungantiwar had gone to Sena leader Uddhav Thackeray’s residence to seek his ‘approval’ for the Act. “Is it okay for the government to get consultation from outside for the GST Act? Why did the finance minister not invite other municipal bodies’ authorities for consultation? It is only the 25,893 votes of Sena that would be useful for the BJP for the Presidential election. Hence the visit,” he said. 

Tags: goods and services tax (gst), goods and services tax, brihanmumbai municipal corporation (bmc), sudhir mungantiwar