Mumbai: The Maharashtra legislature will hold a special session from 20-22 May to discuss and ratify the Goods and Services Tax (GST) Bill, 2017, to pave the way for the national roll-out of GST on 1 July.

Last week, the state cabinet approved a draft Maharashtra GST Bill which will be tabled during the special sitting. The Maharashtra bill seeks to protect the financial powers and autonomy of local self-government bodies in the state.

Maharashtra had ratified the GST Constitutional Amendment Bill in August 2016. On 6 April, Parliament passed four GST bills which now have to be ratified by all states to enable the shift to GST on 1 July.

Earlier this month, Shiv Sena, Bharatiya Janata Party’s (BJP) ally in state and at the Centre, raised objections to the GST, arguing that the introduction of a single tax across the country would nullify local taxes like octroi duty that the civic bodies collect. Shiv Sena pointed out that the Brihanmumbai Municipal Corporation (BMC), which it rules, may lose nearly Rs7,000 crore on account of octroi getting subsumed after the introduction of GST.

In order to accommodate Shiv Sena’s demands, the draft GST Bill passed by the state cabinet has a provision to compensate the BMC and other local bodies for the loss of their sources of revenue. The bill was passed after Shiv Sena president Uddhav Thackeray told Maharashtra finance minister Sudhir Mungantiwar that the BMC should not be made to beg for compensation and that there should be a statutory provision to compensate the BMC.

In the 288-member Maharashtra assembly, Shiv Sena’s support is essential for the BJP for passage of key bills. The BJP has 122 members and Shiv Sena 63.

The draft bill seeks to address some of the key concerns raised by the Shiv Sena. For instance, the BMC will be compensated each month for loss of octroi after the introduction of GST. The bill has a clause which says the amount of compensation will be credited to the BMC’s bank account by the fifth day of each month. In order to get Sena on board before the special session, Mungantiwar met Thackeray at the latter’s residence last week to convince him that the introduction of GST will not cripple the fiscal health and autonomy of BMC.

According to a Maharashtra finance department official, who did not wish to be named, the GST introduction would lead to abolition of several state taxes like sugar purchase tax, state’s share in central sales tax, entry tax on vehicles and goods manufactured in other states, lottery tax, octroi and local body tax. "The local self-government bodies will take the biggest hit because they collect most of these charges or have a share in them. The bill passed by the cabinet also has a provision by which the state government can assign some of its taxes to local bodies to compensate them," the official said.

 17 May 2017, 09:51 AM