Maharashtra Eyes Boost for Local Bodies: Planning to Transfer Professional Tax Collection
Revenue Boost for Local Bodies? Maharashtra Considers Transferring Professional Tax Collection
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In a bid to address the financial strain faced by local bodies in Maharashtra, the state government is exploring a significant change: transferring the rights to collect professional tax to municipal bodies. This move comes in the wake of the abolition of octroi and the implementation of the Goods and Services Tax (GST), which have impacted local revenue streams.
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On Monday, the government announced the formation of a special committee to study the ‘Gujarat Pattern’ of professional tax collection. This committee, comprising officials from the tax and finance departments, has been given a tight deadline of 20 days to submit its report.
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How Much is at Stake?
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Currently, the state government collects professional tax from salaried individuals and various professionals through the GST Commissioner’s office. In the last financial year, this generated roughly ₹2,800 crore in revenue. The potential transfer of these collection rights to local bodies could significantly impact their finances.
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A Growing Need for Local Revenue
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The government argues that rapid urbanization in Maharashtra has placed a heavy burden on local bodies to provide essential civic services. They need more revenue to keep up with these growing demands. The order announcing the committee stated that transferring professional tax collection would provide a ‘stable and substantial revenue stream’ for municipalities.
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The order also pointed out that other states like Kerala, Tamil Nadu, and Gujarat have already adopted similar measures, suggesting that this is a viable and potentially beneficial approach.
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Looking to Gujarat for Guidance
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The committee’s mandate is multifaceted. It will analyze the legal framework used by Gujarat when they transferred tax collection rights, investigate the implementation of IT systems for online payment collection by local bodies, and assess the transition process.
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Crucially, the committee will also study the financial impact of the transfer on local bodies in Gujarat and evaluate how it has influenced their service delivery. The findings are expected to inform Maharashtra’s own strategy for empowering its municipalities with new revenue sources.
