Due to plummeting prices of crude oil in international markets, octroi collections by the Brihanmumbai Municipal Corporation (BMC) have dropped by more than 100 per cent in last five years.
Due to plummeting prices of crude oil in international markets, octroi collections by the Brihanmumbai Municipal Corporation (BMC) have dropped by more than 100 per cent in last five years. This has caused a severe dent in the civic body’s revenues and, to offset it, it has decided to increase the octroi rate on crude oil from 3 per cent to 4.5 per cent.
According to civic data, there was 42 per cent rise in the BMC’s octroi collections on crude oil (Rs 2,428 crore) during the year 2011-12. However, there has been a sharp decline in recent years in the crude oil octroi revenues, which have come down to Rs 1,279.70 crore (minus 32 per cent) in 2015-16.
According to the civic officials, in last couple of years, the crude oil rates in international markets have dropped from USD 110 per barrel to USD 32 per barrel. As octroi is charged on the price of imported goods, its collections have gone down considerably.
The crude oil is imported from Mumbai High and Arab countries. The crude oil, imported from Mumbai High, is supplied to several refineries in the city, from which diesel, petrol and other petroleum products are produced and excise duty is charged on them. After these products are sold, sales tax is charged on them.
Crude oil is one of the major contributors to the BMC’s octroi collection, with 40 per cent revenues coming from its import. The BMC had set an annual target of Rs 7,500 crore for the year 2015-16. However, due to falling crude oil prices, it revised the estimates to Rs 6,550 crore. But it fell way short of the target.
“Due to this, our crude oil octroi collections have been hit very badly. To make up for this, we have decided to increase the octroi rate from 3 per cent to 4.5 per cent. It is likely to add Rs 500 crore in the octroi collections,” said a senior official from the civic assessment and collection department.
