GST: Maharashtra hikes Compensation to Local Bodies

GST Compensation

The State Government, on Thursday, modified the concerned rules granting the power to the local bodies to determine the compensation to them for the loss of revenue due to the implementation of the Goods and Services Tax ( GST ) regime.

The decision came ahead of the 2019 Lok Sabha polls.

Post- GST, the Government switched to a uniform rule to compensate urban bodies for loss of income suffered due to the subsuming of various local body taxes, including the entry tax, local body tax, octroi, and various development cesses, among others.

Actual revenue collections of urban bodies in 2016-17 were considered to arrive at the base income. But on Thursday, the Fadnavis government made an exception for some municipalities. Arguing that it had been approached by some municipalities demanding an upward revision in their base income, the government has now amended rules, retaining the powers for such upward revision in cases where it deems fit.

According to the modification approved by the Cabinet, the government, upon receiving such representations, will now have the power to consider an upward revision of the base income, which would eventually result in higher GST compensation grants for the municipality.

The law department headed by the Chief Minister has raised strong objections to the move. While the law department’s dissent note was discussed on Thursday, the Cabinet went ahead with the move.

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