Maharashtra’s New Revenue Plan: Professional Tax Rights Could Be Handed To Municipal Bodies

In an effort to boost the income of local governing bodies, the Maharashtra government is considering giving them the right to collect professional tax, according to a Hindustan Times (HT) report. This move is expected to help municipal corporations and councils handle the growing demand for civic services more effectively.

Why This Change Is Being Considered?

After the Goods and Services Tax (GST) was introduced and octroi was abolished, local bodies lost a major source of income. At present, the Maharashtra state government collects professional tax from salaried workers and professionals through the GST Commissioner's office. In the financial year ending March 2025, this tax earned the government around Rs 2,800 crore.

However, with rapid urbanisation, cities and towns now need more money to provide better services such as water supply, waste management, and road maintenance. According to a new government order, giving professional tax collection powers to local bodies could offer them a steady and strong source of revenue.

What Has The Government Done?

On Monday, the government formed a special committee made up of officials from the tax and finance departments. This committee has been asked to study the 'Gujarat Pattern' of tax collection, where similar powers have already been given to local bodies. The committee must submit its report within 20 days.

What Will The Committee Study?

The committee will look at several key areas:

• How Gujarat transferred tax collection powers to local bodies.
• The legal steps taken to make the change.
• How IT systems were used for online tax collection.
• The transition process and any problems faced.
• The financial impact on Gujarat's local bodies and their ability to deliver services better.

States like Kerala, Tamil Nadu, and Gujarat already follow this model. Maharashtra is now looking at their experiences to decide the best way forward.

If the proposal goes ahead, it could provide a big financial boost to municipalities across Maharashtra, helping them deliver better services to residents.