Mumbai: BMC concerned it may lose compensatory GST revenue

Centrer-State GST pact to end in July this year

Sweety AdimulamUpdated: Friday, June 24, 2022, 12:06 AM IST
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BMC | FPJ

The Brihanmumbai Municipal Corporation (BMC) is worried as the state will not get its share through the goods and service tax (GST) from the central government from July onwards. The civic body is concerned as the revenue share it received through GST was a compensatory revenue following the loss of octroi which was its major source of income before it was stopped in 2017.

According to a senior BMC official who did not wish to be named, the BMC is currently holding discussions with the state government in this regard. The centre and state signed a pact in 2017 wherein the centre agreed to pay GST to the state for five years, till July 2022, informed the officer. The state government had agreed to give GST revenue to the BMC as compensation for the loss of octroi with an annual increase of 8 per cent in the share.

According to the BMC, in July 2017 the first compensatory revenue that it obtained was Rs 647.34 crore. On average, the BMC annually gets nearly Rs 9,000 crore as compensatory GST revenue, said the officer. Following the annual 8 per cent increase in revenue share, the collection is seeing a steady rise. This means that the BMC is receiving nearly Rs 880.60 crore each month, which compared to 2017 has increased by Rs 233.60 crore per month.

What is Octroi

There were four octroi check nakas in Mumbai – at Dahisar, Mankhurd, Mulund LBS Road, and Mulund Eastern Express Highway. The BMC used to collect an octroi fee from goods and services vehicles that used to enter or leave the city. The octroi fee was scrapped by the state after the union ministry introduced the GST regime in 2017.

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