Answer to FAQ's by my Colleagues : LBT in a nutshell

[Faisal Farooqui]

While the 6 municipal corporations will replace Octroi with LBT from April 1, 2013, Mumbai will do so from October 1, 2013. 
        Of the 26 municipal corporations in Maharashtra, so far LBT has been adopted by 19 such as Kolhapur, Nashik, Aurangabad, Vasai-Virar. But bigger corporations such as Mumbai, Thane, Pimpri Chinchwad, which earn sizeable revenue from octroi, are yet to make the switch.
        LBT is an account-based system where traders and businessmen pay the tax monthly by way of self-declaration. All the municipal corporations are yet to announce the rate of LBT that will be applicable in their cities. 
        The IT channel had mixed reactions on the topic. “From what I hear, BMC is planning to levy LBT of 4 percent in Mumbai. The rate of LBT on IT products in Mumbai will be more but not less than 4 percent as against Octroi rate of 5.5 percent. So there is not much reprieve in terms of lower taxation.

     L.B.T. will be applicable on Gross Purchase Value... If your Bill Amount or amount payable to Party is Rs. 1500/- and the rate of L.B.T. is 1.3%, then your LBT liability for that purchase/bill is Rs.20/-. LBT is payable on a monthly basis by the 10th of the next month. Vendor/supplier will not charge the LBT extra in their bill. If the vendor or supplier is a trader and he is in LBT Zone then he will add the LBT cost in their sale rate.

              LBT is like an old wine in a new bottle. It is not charged anywhere else in the country, except here. The government is making it extremely difficult for businessmen to survive and conduct business in the city. LBT will only lead to double taxation. If it is not removed, businessmen s have decided to surrender their licenses & move to state with better better Political environment conducive for the growth of their business.