Octroi hiked: Mumbai partners feel betrayed

Umesh Asher, Krupa Electronics: The hike will increase corruption in second and third level of BMC staff. If octroi was reduced to 3.5 percent, then majority will pay it willingly and the local Government will generate more revenue. Shashank, Unicomp Services: It is an unwanted burden on an ailing industry during a difficult period.  Kalpana Prakash, Libra Systems: The IT dealer earns two to five percent and the Government makes 15 to 20 percent (four percent sales tax + 5.5 percent Octroi + 0.5 percent reseller tax + income tax + service tax + so on and so forth.) There will be more octroi violation and business focus may shift to other states.  Pramod Dalmia, Spur Electronics: The local Government should learn from Central Government’s experience that reduction in taxes always increases revenue as it brings in more number of tax payers. It also means more amount of official business on records, which is good for industry’s health. The only thing Government has to look for is the proper balance of taxation value and at the same time ensure that it dose not prompt users to evade tax. The Government also should ensure proper collections of taxes at all levels without any corruption.

Despite the efforts put in by local IT trade bodies like TAIT and CMDA to
reduce octroi in Mumbai, the Brihanmumbai Municipal Corporation (BMC) has
instead increased octroi from 4.5 percent to 5.5 percent.

Since the time the local Government approved the revised octroi in May,
traders have been trying to convince the BMC that this will only lead to more
octroi evasion.

Resellers have been trying to convince BMC officials through trade
associations that if the duty is reduced, revenue generated through octroi will
go up, as dealers would willingly pay the reduced cess. However, BMC officials
were not convinced with this explanation.

With an operating margin of just one to two percent, resellers opined that
octroi evasion will increase now, leading to unhealthy competition.

NELSON JOHNY MUMBAI