Cost of municipal services may increase thanks to GST

Mumbai: Thanks to the newly implemented Goods and Services Tax (GST) system, the services offered by the Brihanmumbai Municipal Corporation (BMC) are likely to get costly. The new system has levied 18 to 28 per cent tax on most services that are outsourced by the civic body. This may make such services more expensive for citizens.

The BMC offers 72 types of services to citizens. According to civic officials, most of these services were exempted in the earlier tax regime, while some were levied nominal taxes. However, the GST has levied steep tax increase in civic services, especially on labour works, which are carried out by contractors.

It means road construction and repairs, desilting, conservancy, house keeping, street lighting etc are likely to get more costly.

“Earlier the service provider, i.e. contractor, used to pay the tax. However, under the GST system, the service recipient will have to pay it. It means the BMC will have to pay the GST on the services it is offering to citizens,” said a civic official.

The GST taxation ratio is different for municipal services. While some have been put under the slab of 18 per cent, some have been put under 28 per cent. The GST will compel the BMC to pay additional tax to the Centre and state government. It may result in increasing financial burden on the civic body, the official added.

“To study the GST impact and determine the tax slab of its services, we have appointed M/s Batliboy as consultants. The picture will be clear only after they submit their report,” said chief accountant Hemlata Yekhe.

“Due to the GST, taxes will increase on some of the services or will come down on others. It will be known only after a year what affect the GST will have on BMC expenditure,” said additional municipal commissioner Sanjay Mukherjee.

New tax regime

The GST will result in an increase in tax from three per cent to 28 per cent on municipal services, which was earlier six and 15 per cent.

• Parking – 18%
• Desilting – 18%
• Conservancy – 18%
• House keeping – 18%