Ahmedabad, Nov 14 (UNI) Octroi, a tax levied to fund local bodies functioning, will finally be abolished from Gujarat from tonight.
However, the government is yet to decide on how the losses of seven municipalities will be compensated.
The Octroi, a tax levied almost 147 years ago by the local bodies to run their functioning, was abolished as per the decisions of the State and Union government, which had agreed to it after the introduction of Value Added Tax (VAT) system.
Though model code of conduct is in force after the announcement of elections in the state, the EC has approved the abolition as the decision was taken by the government in accordance with the laws and rules and got approval of the state assembly.
All the seven Municipal Corporations are likely to lose around Rs 1,600 crore annually. The Ahmedabad Municipal Corporation will lose around Rs 400 crore.
The movements of goods traffic in all the seven corporations have been showing a downward trend after the announcement of Octroi abolition and traders now expect a heavy influx of goods, which are being stocked outside corporation area limits.
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 the inflow of vehicles slowed down, soon after announcement of the abolition.
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.
Officials said that the new government to be installed in December, would have 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.