The Local Body Tax (LBT) is a tax levied by municipal corporations in Maharashtra on the entry of goods into their jurisdiction for consumption, use, or sale. LBT applies to all goods except those specified in Schedule B and rates vary from 0.1-7% as per Schedule A. Dealers with annual imports over Rs. 100,000 or sales/purchases over Rs. 500,000 must register for LBT. Registered dealers must self-assess their monthly tax liability and pay within 20 days. Certain goods, industries, and transactions are exempt from LBT, including exports. Dealers must file annual and monthly returns and are subject to assessment, interest for late payments, and penalties for

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2. h i
What is LBT
The 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 Corporation.
Municipal Corporation
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3. MAHARASHTRA
Municipal
Corporation
A
IMPORT
Municipal
corporation B
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(for
Consumption,
Use or Sale
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EXPORT
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4. Applicability
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 covered
All Proprietorships
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.
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5. 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.
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6. i
i
Registration
In case of a dealer, who is an importer & value of all goods imported
by him during the year is not less than Rs. 1,00,000
In any other case, including the case where a dealer has not become
liable to pay LBT under above provision & turnover of his sales or
liable 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 a
city 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 ?
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7. Registration (Contd….)
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(
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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
and Rules or not
A dealer registered under Maharashtra Value Added Tax having a
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 required to get registered under LBT separately.
Every person to whom LBT is applicable is required to apply for
registration within 30 days in Form A as issued by state
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A i
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Govt. for the said purpose.
For temporary registration, apply before 15 days of
commencement of such business.
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8. Payment
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Dealer is required to self assess the liability of LBT for the goods
imported in the previous month and pay the tax liability within 20 days
from the end of such month.
Composition Scheme
If a registered dealer whose turnover of all purchases during a
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year is less than Rs. 10,00,000 can opt for the payment of
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lump 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
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f
declaration, 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
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receipt by him, of such an order.
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9. 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
lakh
Rs. 4,000
Exceeding 2 lakh but not exceeding 3
lakh
Rs. 6,000
Exceeding 3 lakh but not exceeding 4
E
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lakh
Rs. 8,000
R 8 000
Exceeding 4 lakh but not exceeding 5
lakh
Rs. 10,000
Exceeding 5 lakh but not exceeding 6
lakh
Rs. 12,000
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10. Table A ( for lump sum payment of LBT)
Turnover of all purchases
during a year
LBT payable per year
Exceeding 6 lakh but not exceeding 7
lakh
Rs. 14,000
Exceeding 7 lakh but not exceeding 8
lakh
Rs. 16,000
Exceeding 8 lakh but not exceeding 9
lakh
Rs. 18,000
Rs. 18,000
Exceeding 9 lakh but not exceeding 10
lakh
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
him in the higher slab less LBT already paid.
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11. Rates applicable for builders & Contractors
Any builder or contractor who undertakes the work of construction within
the municipal limits shall get himself registered with the corporation
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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 sq.
For construction up to 4 floors (building without lift)‐‐‐Rs 100 per sq
meter
For 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.
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12. E
ti
Exemptions
The goods specified in Schedule B (such as vegetables, milk, bread, etc.)
are exempt from levy of LBT.
are 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
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should be re‐imported within six months & dealer require to furnish such
information 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
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of 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:‐
• Dealer shows the value of such goods in return of relevant period
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• Dealer pays a security deposit as may be determined by commissioner.
[REFER SLIDE 22]
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13. Exemptions (Contd….)
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
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 disclosed
the 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]
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14. R f d f LBT i
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Refund of LBT in case of export
•
•
•
•
If 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.
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15. Returns
Every registered dealer shall furnish an annual return in Form
Every 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 F.
him in Form F
Every registered dealer who is not an importer shall be
Every registered dealer who is not an importer shall be
required to file a NIL return.
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16. Assessment
Registration
Payment
Filing of Return
Selection of return for assessment
Within 5 years from the end of the year to which such assessment relates
Issue of notice for hearing (Form H)
Appellate authority
Submission of documents before
assessing authority
Personal hearing
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Assessment order
(Form I)
SLIDE 16

17. &
li
Interest & Penalties
If 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 for
A 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
or under the provisions of these rules to pay it, then he shall be liable to
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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).
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18. 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
the goods sold had been imported by the selling dealer in the city.
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If the dealer fails to comply with any notice in respect of proceeding,
assessments, production & inspection of books of accounts etc a sum not
exceeding Rs. 5,000 will be imposed as penalty.
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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
goods imported in the city for consumption, use or sale, where such
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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 a dealer fails to maintains the accounts as required by law, shall be
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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 18
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19. Offences & Prosecutions
Offences & Prosecutions
Whoever:‐
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, or
earlier at the time when he sells or buys or import or
Knowingly furnishes a false return, or
Knowingly produces before the commissioner false bills, cash memo’s, declarations,
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for any purpose, or
Knowingly keeps false accounts of the value of goods bought or imported or sold by
him, or
Knowingly produce false account, registers or knowingly produce false information,
or
Issues 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
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leviable under this Act, or
Aids or abets any person in commission of any act specified above
Fails without sufficient cause to furnish any information/return/comply with any
requirements or obstructs any officer making any search or seizure
requirements 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
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20. i
b
i i
Register to be maintain
Dealers are required to maintain a register in the
Dealers are required to maintain a register in the
prescribed format (Form D) containing the imports made
and the LBT paid on such goods.
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Dealers are also required to display registration certificate
at the place of business.
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21. Dealer re‐imported the goods which are exported for process
Goods exported for
carrying out process
Conditions
•No change in condition &
appearance of goods
Municipal
Corporation
A
Municipal
Corporation
p
B
•Ownership of goods
should not change
should not change
•LBT leviable only on value
added i.e. processing
charges
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Same goods re‐imported
Within Six months after
process
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•Furnish details in return
•Re‐import within six
months.
SLIDE 21

22. Dealer imported the goods for job work are exempt
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Re‐export within six
month
Conditions
Re export within six
•Re‐export within six
months.
Municipal
Corporation
C
ti
A
Municipal
Corporation
B
Import of goods for job work
Open Issues:
Open Issues:‐
What about scrap generated at job workers premises?
Whether LBT will be payable on scrap if it is not
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returned ?
•Ownership of goods
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should not change.
•Furnish details in return.
•Security deposit as
required by commissioner.
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23. Dealer imported the goods rejected by his
customer are exempt
Goods sold to customer
Conditions
•Re‐import should be
within six months
Municipal
Corporation
C
ti
A
Municipal
Corporation
B
•Disclosed in return of
relevant period.
relevant period
Re‐import goods rejected by
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customer within six months
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24. Dealer imported goods which are used for
export outside the territory of India are exempt
Goods imported which are
used for goods exported
Municipal
p
Corporation
B
Municipal
M i i l
Corporation
A
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Export of goods
outside the
territory of
India
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 what
If plant & machinery used for domestic as well as export production on what
proportion LBT will be charged?
What about scrap generated in production ?
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25. Thank you
For any assistance/ advice on LBT please
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it
/ d i
LBT l
contact our LBT help desk:
Mukesh Raj & Co
Raj & Co.
Contact No. 9819010465
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