LBT awareness

SLIDE 1www.mukeshraj.com

h iWhat is LBTThe LBT is Local Body Tax levied by a Municipal Corporation,

payable on entry of goods brought into the area of such municipal corporation for the purpose consumption, use or sale from other Municipal CorporationMunicipal Corporation.


MAHARASHTRA

Municipal Corporation A

Municipal corporation B

IMPORT EXPORT

p(for Consumption,Use or Sale


ApplicabilityLBT has been introduced in lieu of Octroi /cess and it has been LBT has been introduced in lieu of Octroi /cess and it has been made applicable in jurisdiction of various municipal corporation in Maharashtra with effect from 1 April 2013.

Following persons are coveredAll Proprietorships All Partnerships All Partnerships Companies, LLPs Trusts Service Industries such as Software Companies, CAs, Advocates, Hospitals, etc. HUF, AOP, BOI Govt. Departments who import goods for Profit.


Rates of Tax

LBT is applicable on all goods (except goods specified in Schedule B) brought within the area of a municipal corporation by a dealer. Schedule A provides for rate of LBT which varies from 0.1% to 7% for different types of products. There is residuary rate of 4% as well.products. There is residuary rate of 4% as well.


i iIn case of a dealer, who is an importer & value of all goods imported

Registrationby him during the year is not less than Rs. 1,00,000In any other case, including the case where a dealer has not become liable to pay LBT under above provision & turnover of his sales orliable to pay LBT under above provision & turnover of his sales or purchases during such year is not less than Rs. 5,00,000.If a dealer or a person not carrying on a particular business in the city on a regular basis carries on business in the city in any year on acity on a regular basis, carries on business in the city in any year on a temporary basis, then he shall be liable for temporary registration whether he is covered by

Open issues:‐If a person carrying goods along with him to display and sale in an exhibition, happening in different city‐ will it be considered as import of goods ? If yes what should be the purchase value ?


Registration (Contd….)

Except as otherwise provided, turnover of all sales or turnover of all purchases, shall be taken into account whether such sales or purchases are of goods taxable under the provisions of the Act

g ( )

purchases are of goods taxable under the provisions of the Act and Rules or not A dealer registered under Maharashtra Value Added Tax having a place of business within the limits of respective Municipal place of business within the limits of respective Municipal Corporation is deemed to be registered for LBT.However person who is registered under MVAT outside Municipal Jurisdiction but carries out business activities within Municipal Jurisdiction but carries out business activities within Municipal Jurisdiction required to get registered under LBT separately.Every person to whom LBT is applicable is required to apply for

i t ti ithi d i F A i d b registration within 30 days in Form A as issued by state Govt. for the said purpose.For temporary registration, apply before 15 days of

f h bcommencement of such business.


Dealer is required to self assess the liability of LBT for the goods

Paymentq f y f f g

imported in the previous month and pay the tax liability within 20 days from the end of such month.

Composition SchemeIf a registered dealer whose turnover of all purchases during a year is less than Rs. 10,00,000 can opt for the payment of y p f p y flump sum amount as specified in table A given below. For lump sum payment of LBT he shall furnish a declaration in Form R prescribed under rule 27. On the basis of p 7 fdeclaration, the commissioner shall being satisfied, grant him permission to pay a lump sum amount of LBT.The dealer shall pay tax within 15 days from the date of p y 5 y f freceipt by him, of such an order.


Table A ( for lump sum payment of LBT)Turnover of all purchases during a year

LBT payable per year

Up to 1 lakh NIL

Exceeding 1 lakh but not exceeding 2 Rs. 4,000lakh

Exceeding 2 lakh but not exceeding 3 lakh

Rs. 6,000

E di l kh b t t di R 8 000Exceeding 3 lakh but not exceeding 4 lakh

Rs. 8,000


Rs. 10,000


Rs. 12,000


Table A ( for lump sum payment of LBT)Turnover of all purchases during a year

LBT payable per year


Rs. 14,000


Rs. 16,000

Exceeding 8 lakh but not exceeding 9 Rs. 18,000Exceeding 8 lakh but not exceeding 9 lakh

Rs. 18,000


Rs. 20,000

If during any subsequent year in which permission is in force, the turnover of all purchases of such dealer exceeds the limit of such slab, he shall pay such differential amount of LBT as to equal the amount of LBT payable by such differential amount of LBT as to equal the amount of LBT payable by him in the higher slab less LBT already paid.


Rates applicable for builders & ContractorsAny builder or contractor who undertakes the work of construction within h l l h ll h lf d h hthe municipal limits shall get himself registered with the corporation under LBT and shall have option to pay a lump sum payment in accordance with following norms:‐For construction up to 4 floors (building without lift)‐‐‐Rs 100 per sqFor construction up to 4 floors (building without lift)‐‐‐Rs. 100 per sq. meterFor construction up to 7 floors (building with lift)‐‐‐ Rs.150 per sq. meter

For construction of high rise building (above 7 floors)‐‐‐Rs. 200 per sq. meter

Any dealer or person undertaking any work within the area of Municipal Corporation shall have the option of paying lump sum @ 0.25% of the total contract value.


E tiThe goods specified in Schedule B (such as vegetables, milk, bread, etc.)

are exempt from levy of LBT

Exemptionsare exempt from levy of LBT.

If any goods held by dealer or a person in city are moved outside the city for carrying out the process and are re‐imported without effecting any change in conditions or appearance as also the ownership of the goods change in conditions or appearance, as also the ownership of the goods, the value of the goods moved out, shall be allowed to be deducted from the total value of processed goods re‐imported and LBT shall be leviable only on the value added i.e. processing charges, transfer charges etc. (Goods should be re‐imported within six months & dealer require to furnish such p q finformation in the return) [REFER SLIDE 21]

If any dealer in the city imports any goods from any place outside the city for carrying out any process, on job work basis & proves to the satisfaction f y g y p , j p fof commissioner that the goods processed have been exported within six months from their importation, to the same person outside the city and there had been no change in the ownership and in the form of goods at the time of export, no LBT shall be levied; provided:‐

l h h l f h d i f l i d• Dealer shows the value of such goods in return of relevant period• Dealer pays a security deposit as may be determined by commissioner.

[REFER SLIDE 22]SLIDE 12www.mukeshraj.com

Where any goods held in the city are sold and exported outside the city and received back due to rejection of goods by the purchaser no LBT shall be

Exemptions (Contd….)

received back due to rejection of goods by the purchaser, no LBT shall be levied on such goods, provided that the goods are returned back in the City within a period of six months from the date of their export & dealer proves to the satisfaction of the Commissioner that the sale of such goods was disclosedthe satisfaction of the Commissioner that the sale of such goods was disclosed in the return of relevant period. [REFER SLIDE 23]

The registered dealer who is exporting the goods outside the territory of India, shall be exempt from the levy of LBT in respect of the value of the goods used for the purpose of such export. [REFER SLIDE 24]


R f d f LBT i fRefund of LBT in case of exportIf the goods are imported in the city and LBT has been paid and if such goods are exported outside the city, 90% of the tax so paid shall be refunded subject to following conditions:‐

• Details of goods imported in relevant return, showing that goods are imported for export

• LBT on import is paid with relevant return• Goods are exported within six months• Goods are exported without making any change in goods.


Every registered dealer shall furnish an annual return in Form

ReturnsEvery registered dealer shall furnish an annual return in Form E‐II within ninety days from the end of the year to which such return relates duly signed by him or by person nominated by him in Form Fhim in Form F.

Every registered dealer who is not an importer shall beEvery registered dealer who is not an importer shall be required to file a NIL return.


AssessmentAssessmentRegistration

Payment

Filing of Return

Selection of return for assessment

Issue of notice for hearing (Form H)Appellate authority

Within 5 years from the end of the year to which such assessment relates

Submission of documents before assessing authority

Appellate authority

Personal hearingAssessment order

(Form I)SLIDE 16www.mukeshraj.com

& l iInterest & PenaltiesIf a person has failed to apply for registration as required & carried on business as a dealer without being registered in contraventions of the provisions of the Act & Rules:‐A sum not exceeding 5 times of the amount of LBT payable by dealer forA sum not exceeding 5 times of the amount of LBT payable by dealer for the period during which he carried on business as dealer.

If a person or dealer does not pay the LBT within the time he required by d th i i f th l t it th h h ll b li bl tor under the provisions of these rules to pay it, then he shall be liable to

pay by way of simple interest, in addition to the amount of LBT, a sum equal to 2% per month of such LBT after the last date by which he should have paid such LBT.

If a dealer or person fails, without sufficient cause to furnish within prescribed time, a return for any period, a penalty of sum not exceeding Rs. 5,000 will be imposed. ( Non filing of NIL RETURN is also covered).Rs. 5,000 will be imposed. ( Non filing of NIL RETURN is also covered).


Interest & Penalties (Cont )Interest & Penalties (Cont…)If selling dealer fails to issue to the purchasing dealer a bill, invoice or cash memo (containing LBT registration no, name & type of business, details & price of goods) the commissioner may after giving the selling dealer a reasonable opportunity of being heard, impose upon him by way of penalty a sum equal to the amount of that would have been payable if h d ld h d b i d b h lli d l i h ithe goods sold had been imported by the selling dealer in the city.If the dealer fails to comply with any notice in respect of proceeding, assessments, production & inspection of books of accounts etc a sum not

di R ill b i d lexceeding Rs. 5,000 will be imposed as penalty.If a dealer furnishes a wrong declaration or certificate by reason of which any local body tax is not leviable or leviable at a lower rate on any

d i d i h i f i l h h goods imported in the city for consumption, use or sale, where such person or dealer knew or had reasons to believe that such declaration is false, a penalty of twice the amount of LBT payable will be imposed.If d l f il i i h i d b l h ll b If a dealer fails to maintains the accounts as required by law, shall be liable to pay in addition of LBT payable, the penalty of amount not exceeding Rs. 5,000 or double the amount of LBT, whichever is less.SLIDE 18www.mukeshraj.com

Offences & ProsecutionsOffences & ProsecutionsWhoever:‐

Not being a registered dealer falsely represents that he is or he was a registered earlier at the time when he sells or buys or import orearlier, at the time when he sells or buys or import, orKnowingly furnishes a false return, orKnowingly produces before the commissioner false bills, cash memo’s, declarations, for any purpose, or y p p ,Knowingly keeps false accounts of the value of goods bought or imported or sold by him, orKnowingly produce false account, registers or knowingly produce false information, ororIssues to any person, a certificate required under the provisions of the rules or a false bill, cash memo’s which he knows or has reasons to believe to be false, or Willfully attempts in any manner whatsoever to evade any cess/penalty/interest y p y y /p y/leviable under this Act, orAids or abets any person in commission of any act specified aboveFails without sufficient cause to furnish any information/return/comply with any requirements or obstructs any officer making any search or seizurerequirements or obstructs any officer making any search or seizure

Shall on conviction, be punished with an imprisonment for a term which may extend to two years and with fine


i b i iDealers are required to maintain a register in the

Register to be maintainDealers are required to maintain a register in the

prescribed format (Form D) containing the imports made and the LBT paid on such goods.p g

Dealers are also required to display registration certificate at the place of business.


Goods exported for carrying out process

Dealer re‐imported the goods which are exported for process

Conditions•No change in condition &

Municipal CorporationA

MunicipalCorporation

appearance of goods

•Ownership of goods should not changeA p

B should not change

•LBT leviable only on value added i.e. processing h

Same goods re‐importedWithin Six months after

charges

•Furnish details in return

Within Six months after process •Re‐import within six

months.


Dealer imported the goods for job work are exempt

Re‐export within six pmonth

Conditions•Re‐export within six

Municipal C ti Municipal

Re export within six months.

•Ownership of goods h ld hCorporation

AMunicipalCorporationB

should not change.

•Furnish details in return.

Import of goods for job work

•Security deposit as required by commissioner.

Open Issues:‐Open Issues:What about scrap generated at job workers premises? Whether LBT will be payable on scrap if it is not returned ? SLIDE 22www.mukeshraj.com

Dealer imported the goods rejected by his Dealer imported the goods rejected by his customer are exempt

Conditions•Re‐import should be

Goods sold to customer

Municipal C ti Municipal

within six months

•Disclosed in return of relevant periodCorporation

AMunicipalCorporationB

relevant period.

Re‐import goods rejected by p g j ycustomer within six months


Dealer imported goods which are used for

Goods imported which are used for goods exported Export of goods

Dealer imported goods which are used for export outside the territory of India are exempt

used for goods exported

M i i l Municipal

p goutside the territory of India

Municipal CorporationA

pCorporationB

Open issues:-Whether capital goods such as plant & machinery used for production will be

exempt?If plant & machinery used for domestic as well as export production on whatIf plant & machinery used for domestic as well as export production, on what

proportion LBT will be charged?What about scrap generated in production ?


Thank you

F i t / d i LBT lFor any assistance/ advice on LBT please contact our LBT help desk:Mukesh Raj & CoMukesh Raj & Co.Contact No. 9819010465

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LBT awareness