Nagpur: Leading trade associations of the region—Chamber of Associations of Maharashtra Industry and Trade (CAMIT), Vidarbha Industries Association (VIA), Nag Vidarbha Chamber of Commerce (NVCC), Nagpur Chamber of Commerce Limited (NCCL), and Vidarbha Taxpayers Association (VTA)—have jointly welcomed the Maharashtra government’s decision to shut down the Local Body Tax (LBT) department in all municipal corporations by April 30, 2025. Key representatives from these associations expressed their gratitude to Chief Minister Devendra Fadnavis and the state government, emphasizing that this decision is not a victory of traders over the government but a testament to the government’s commitment to resolving long-standing issues of the business community and promoting ease of doing business.
Dr. Dipen Agrawal, President of CAMIT, stated that the LBT was introduced in phases starting in 2010 and became applicable in all municipal corporations across the state (excluding Mumbai) in 2013. The business community strongly opposed LBT, leading to its partial withdrawal in 2015 and full abolition after the introduction of the Goods and Services Tax (GST) in 2017. Following persistent efforts by all stakeholders and direct engagement with Chief Minister Devendra Fadnavis, the Urban Development Department has now directed the closure of LBT departments by April 30, 2025. However, some municipal corporations are reportedly seeking a one-year extension.
Gold Rate
Monday 02 March 2025
Dr. Agrawal highlighted that between 2010-11 and 2012-13, the average annual octroi collection in Nagpur was ₹425 crore. During the LBT period (April 1, 2013, to July 1, 2017), potential revenue from octroi would have ranged between ₹1,500 crore and ₹1,700 crore. However, the Nagpur Municipal Corporation (NMC) collected significantly higher amounts and also received compensation and grants from the state government, by way of 1% cess on real estate transactions which was introduced in 2013, followed by a ₹40 crore per month grant after the partial abolition of LBT in 2015. Post-LBT abolition, corporation revenue has been protected through statutory grants under the Maharashtra Goods and Services Tax (Compensation to the Local Authorities) Act.
In 2018, LBT officials claimed ₹1,000 crore was due from traders, including ₹700 crore in assessed dues. However, six years later, the department now claims arrears of ₹3,200 crore. Dr. Agrawal questioned the basis of these inflated figures and urged the government to stand firm on its decision to close the LBT department without dilution or extensions.
Girdhari Mantri (VIA) pointed out that many manufacturing units of VIA members are located outside city limits and were not liable for LBT. However, the LBT department still assessed them and issued unjustified demands simply because their registered offices were within municipal limits. He stressed that such actions contradict the government’s policy of fostering ease of doing business and warned against any extension of the LBT department’s functioning.
Arjundas Ahuja (NVCC) highlighted the hardships traders faced due to LBT since 2013. NVCC’s LBT camps in 2018 and 2020 revealed numerous inflated and unreasonable tax demands. In one instance, a trader dealing in exempted goods (rice) received a tax demand in crores. Another case saw an initial demand of ₹170 crore being reduced to zero after assessment. Ahuja cautioned against reviving the LBT department, emphasizing the unnecessary harassment it caused to traders.
Tarun Nirban (NCCL) noted that NMC had already downsized the LBT department due to minimal collections, with staff reductions over the past two to three years making the department nearly non-functional. The government’s directive to close it is merely formalizing the existing reality, and hence, there is no justification for any extension.
Sharavan Malu (VTA) underscored the compensatory measures given to municipal corporations over the years. In 2013, the state government introduced an additional 1% stamp duty on real estate transactions in Nagpur to offset potential revenue shortfalls. Further compensation and grants were provided when LBT was partially abolished in 2015 and fully abolished in 2017. Given these compensations, he argued that municipal corporations’ demands for further compensation are unjustified.
The press conference was attended by prominent business leaders, including J.P. Sharma, Sachin Puniyani, Tejinder Singh Renu, Narayan Toshniwal, Pradeep Jajoo, Dhyaneshwar Rakshak, Keval Ramani, Rakesh Gandhi, Suryakant Agrawal, Umesh Patel, Harman Bawecha, and Husain Noorallha Ajani.
The joint press note was issued by Sanjay K. Agrawal, Vice President of CAMIT.
