In a significant move, the Brihanmumbai Municipal Corporation announced on Monday abolition of the age-old octroi levy which will be replaced by Local Body Tax (LBT) from October 1.

Making the announcement to the effect in the budget presented on Monday, Municipal Commissioner Sitaram Kunte said that “LBT will be leviable on import of articles into the limits of corporation and business community will be responsible for monthly payment of tax by way of self declaration,”.
The levy of octroi, often resented by the trading community, is payable on all goods that are brought into the city limits and has been the biggest revenue earner for the municipal corporation. Last year, the corporation was estimated to have received about Rs 7,000 crore from octroi.
The Maharashtra government had got many municipal bodies in the state to do away with octroi and replace it by LBT. The BMC, however, was resisting the move given that it was bringing in huge revenues for the corporation.
Presenting the budget today, the commissioner said that Maharashtra government in January had directed the corporation to do away with octroi and replace the same by LBT.
“This reform will boost business friendly image of Mumbai and will remove the bottlenecks associated with the present method of octroi collection and improve the efficiency in movement of goods,” he said.
The removal of octroi had also become necessitated with the union government planning to introduce Goods and Services Tax (GST).