Mumbai: Shopkeepers, traders go on strike to protest new tax

Apr 21, 2013, 12:12 IST | Varun Singh

Shopkeepers' association claims Local Body Tax will make it difficult to conduct business. City may lose Rs 500 crore due to strike tomorrow; state may lose Rs 2,500 over two days, as shopkeepers threaten to move to Gujarat

Mumbai’s traders, shopkeepers and their associations seem to be at their wits’ end. Their ultimatum is clear: forget about the Local Body Tax (LBT), or see us gradually shift to the neighbouring state of Gujarat because conducting business is becoming difficult here.

The Federation of Retail Traders’ Welfare Association (FRTWA), and the Retailers and Wholesellers Federation have called for a strike to protest LBT. Some traders say they will sit on an indefinite strike, whereas others will go on strike for 48 hours in the rest of Maharashtra. The expected losses will be around Rs 500 crore for Mumbai alone on Monday, and is likely to cross more than Rs 2,500 crore for the rest of the state.

Traders and shopkeepers to go on strike, Mumbai
File pic

Viren Shah, a member of the FRTWA, and other traders of the Retailers and Wholesellers Federation claim they are sure they will shift to Gujarat if the government doesn’t hear them out. "Gujarat only levies a 5 per cent VAT, of which 1 per cent is given to the corporation. However, here, we already have the VAT. If LBT is implemented, too, it could be up to 3 per cent. It will burden us more with taxes,” said Shah.

Shah also claims that the rising property taxes are anyway driving people out of Mumbai. If more taxes are levied, the city will lose its reputation of being the financial capital of the country. “If people leave the city, whom will the shopkeepers sell their products to? We will move out of this city if the government doesn’t come up with a solution for our problems,” said Shah.

According to the traders, the problem is that LBT, or any tax for that matter, is not uniform — every product is taxed multiple times. “The problem is that we are taxed in every district and city. Moving a product from one district to another means we pay tax on them. Any product reaching Mumbai from some other district of the state means it has already paid multiple taxes. Our demand is that the government only impose VAT and no other tax,” said Shah. Shah claims his fraternity is ready to talk to the Gujarat Chief Minister, Narendra Modi, if needed, so they can shift base to Gujarat.

What is LBT?
Local Body Tax is the tax that would be imposed on the sale, consumption or use of the products by the local civic body. According to traders, the tax will be an addition to the existing VAT. LBT replaces the old octroi that every corporation charged whenever any truck or vehicle carrying goods entered their limits. Traders claim that if they have to pay more taxes, they will finally levy it on the buyers as the end product will cost them more. The tax varies from 0-7 per cent, depending on the goods.  

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