Clarification regarding determination of turnover for the purpose of LBT in Maharashtra

 

 

This Tax Alert summarizes a recent clarification issued by Urban Development Department (UDD) vide Notification No. LBT. 2015 / C.R. 42 / UD-32 dated 15 September 2015 in Maharashtra. The UDD has stated that the turnover of the dealer within the municipal corporation area is required to be considered.

 

The Maharashtra State Government had earlier announced vide notification dated 1 August 2015 that dealers with turnover of not less than INR 50 Crores shall only be liable for registration. Subsequent to this announcement, doubts were raised by various Dealers’ Association regarding the determination of turnover i.e., whether turnover within municipal corporation area is to be considered or turnover in relation to the business of the dealer within the entire State of Maharashtra. In this regard, the concerns of the Dealers Associations have now been addressed.

 

View of the Law and Judicial Department (LJD) of the Maharashtra State Government was sought. They have thus clarified that the turnover of the dealer within the corporation area is required to be considered and not the turnover for the entire State of Maharashtra.

 

Further, in order to assure the municipal corporations on compensating them for the loss of revenue from LBT, a 1 percent surcharge on stamp duty collections has been proposed to be levied.

 
The clarification issued by the UDD puts to rest the uncertainty which had arisen over the determination of the turnover. The apprehensions of the municipal corporations on the revenue loss on account of abolition of LBT have been addressed by the Maharashtra State Government. It is hoped that upon implementation of GST, LBT would be fully subsumed in the State GST without differentiating between small dealers and large dealers