What is Local Body Tax (LBT) ?
LBT is the tax on entry of goods for use or consumption within the areas of the local civic bodies. It is a self assessment or account based method of paying local tax, where the businessmen or trader himself declares his tax liability.
Unlike in the octroi regime, trucks carrying goods will not be subjected to physical checking at check posts.
How does LBT work?
It works differently from the octroi system. Traders have to compile a list of all goods procured within the month, feed the matter into the software provided by the civic body to check their LBT liability.
They have to make payment once every 40 days using online portals, cheque, demand draft or cash through a designated bank or counters of the civic bodies.
LBT would be based on declaration by shops and commercial establishments, on their inputs purchased. Like the state’s sales tax, it is to be paid by all shops and establishments. It is now tied to your PAN or TAN number. In case you have been evading sales tax or VAT, you will stand exposed by not paying LBT.
Significance of LBT
LBT will be the main source of income for civic bodies. It contributes between 50-70 per cent of the actual revenues of the corporation.