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Shiv Sena MPs says that GST will dent BMC finances

Introduction of the Goods and Services Tax (GST) may not be in the interest of the BMC, pointed out Shiv Sena MPs during the discussion on the GST Bill in Parliament on Wednesday as octroi, which is a major source of revenue, gets subsumed in this tax. This means, the revenue will flow to the Centre, who will devolve it to the state, who will then pass it on to the BMC. Fears about the timeliness of the fund disbursement, it was felt, would critically hamper Mumbai’s development projects and daily functioning. The Bill was passed in Parliament on Wednesday.

The BMC earns Rs 7,000 crore a year from octroi, said Sena MP Anil Desai. Owing to the decline in the price of crude by 36% in 2014-15 and 32% in 2015-16, the revenue collection is Rs 7,000 crore, else it would be over Rs 8,000 crore. “Octroi revenue will be subsumed in GST. Mumbai, a business hub, provides the maximum tax revenue to the Centre, but hardly anything comes back. The BMC funds several development projects through the revenue that it generates such as operating 7,000 buses at a cost of Rs 400 crore and providing education and health care to the poor,” said Desai.

GST will result in a dent in BMC’s finances, said Desai, adding, “The BMC must be compensated by the Centre with an annual accreditation of 10%. The funds must not devolve to the state corpus, but must directly devolve to the BMC. The 14th Finance Commission had mentioned direct devolvement from Centre to gram sabha. A mechanism of direct transfer to BMC must be built in.”

Yuva Sena chief Aaditya Thackeray tweeted that the Centre should give special status to Mumbai in the revenue system and not clip its financial or administrative autonomy.

 Supporting the Sena , NCP MP Praful Patel, in his five-minute speech, said, “BMC’s revenue is more than that of even some states. If devolution from Centre is not made in time, how will it manage civic affairs? A lot more monitoring is required.”
Sena MP Sanjay Raut said while the Centre is calling the passing of the GST Bill an historic move, Mumbai will suffer the most and in the absence of revenue, many projects will be hit. “If not monitored properly, the cash-rich BMC may have to stand with a begging bowl in front of the state government,” said Raut. “Mumbai contributes to 30% income-tax and 60% in custom duty. If Mumbai is weakened, it is not good for you (Centre) as well.”


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