Gujarat - Octroi goes from tonight

After close to 147 years when it was first levied, octroi will be finally abolished from seven corporation areas of Gujarat at the stroke of 12 on November 14. The Election Commission (EC) had cleared the abolition on October 24.

However, the state government is still to decide on how to offset the losses of Rs 1,600 crore that it would incur due to phasing out of this tax.

After Wednesday, the city is expected to witness a heavy influx of goods, which are being stocked outside corporation area limits by traders, who are awaiting octroi abolition with baited breath.

The daily octroi income of Ahmedabad Municipal Corporation (AMC) had dipped by nearly Rs 10 lakh to Rs 2.15 crore this Diwali as compared to last year as inflow of vehicles slowed down soon after announcement of the abolition.

Revenues fell by nearly Rs 10,000 at octroi collection centres at Judges Bungalow and Rajpath Club during the month.

However, at the Bopal-Ambli naka, the reason for good collection was income from courier and cargo companies which have to invariably bring in their consignments.

Octroi officials also believe that around 10,000 workers employed with traders and transporters will lose their jobs due to octroi abolition.

"Transporters and traders had employed people to pay octroi. But now with no duty, workers will lose their jobs. Also, people working at godowns outside city limits will have to find new jobs, as many traders are now planning to move to godowns inside city limits," officials said.

Meanwhile, government officials said that the new government's first step would be to find an alternative to octroi. The seven-member committee constituted for this is convinced of two options — increasing the value added tax by one per cent in the four per cent and 12 per cent slabs and levying cess on petrol, diesel, CNG and LNG..

"If VAT on TV or refrigerator was 12 per cent, it would increase to 13 per cent. Items in the four per cent VAT slab would draw five per cent," said an official in Gandhinagar.

Even after increasing the VAT slab rates, government would have to fund nearly 40 per cent of the total Rs 1,600 crore from its own exchequer. An increase of 1.5 per cent instead of one per cent cannot be ruled out. Officials said that the government was planning to replace octroi on petrol with cess and it would be applicable in the entire state.