GOVERNMENT OF MAHARASHTRA

LAW AND JUDICIARY DEPARTMENT

MAHARASHTRA ACT No. XLI OF 2017

THE  MAHARASHTRA  GOODS  AND  SERVICES  TAX
(COMPENSATION  TO  THE  LOCAL  AUTHORITIES)
ACT,  2017.

( As  modified  upto  12th  December  2018 )

PRINTED  IN  INDIA  BY  THE  MANAGER,  GOVERNMENT  PRESS,  WAI  AND  PUBLISHED  BY

THE  DIRECTOR,  GOVERNMENT  PRINTING,  STATIONERY  AND  PUBLICATIONS,
MAHARASHTRA  STATE,  MUMBAI–400  004.

2018

[ Price––Rs. 19.00 ]

2017 : Mah. XLI ]

THE MAHARASHTRA GOODS AND SERVICES TAX
(COMPENSATION TO THE LOCAL AUTHORITIES)
 ACT, 2017.

CONTENTS

PREAMBLE.

SECTIONS.

1. Short title, extent and commencement.

2. Definitions.

3. Projected growth rate.

4. Base year.

5. Base  year  revenue.

6. Projected revenue for first year.

7. Projected  revenue  for  any  other  year.

8. Calculation and release of compensation.

9. Amendment of Schedule.

10. Power to make rules.

11. Power to remove difficulties.

SCHEDULE

MAHARASHTRA ACT No. XLI OF 2017.1

[THE MAHARASHTRA GOODS AND SERVICES TAX
(COMPENSATION TO THE LOCAL AUTHORITIES ACT, 2017.]

(This Act  received  the  assent  of  the  Governor  on  the  28th  May  2017;  assent  was  first

published in the Maharashtra Government Gazette, Part IV, on the 29th May 2017.)

An Act to provide for compensation to the Municipal Corporation of Brihan Mumbai and
other local authorities for loss of revenue arising on account of abolition of octroi and local
body tax, due to implementation of the goods and services tax and for matters connected
therewith or incidental thereto.

WHEREAS, it is expedient to provide for compensation to the Municipal Corporation of
Brihan Mumbai and other local authorities for loss of revenue arising on account of abolition
of octroi and local body tax, due to implementation of the goods and services tax and for matters
connected therewith or incidental thereto; it is hereby enacted in the Sixty-eighth Year of the
Republic  of  India  as  follows  :––

1.

(1) This Act may be called the Maharashtra Goods and Services Tax (Compensation

to the Local Authorities) Act, 2017.

(2)

It  extends  to  the  whole  of  the  State  of  Maharashtra.

(3)

It shall come into force on such date  2

 as the State Government may, by notification

in the Official Gazette, appoint.

Short  title,
extent  and
commence-
ment.

2.

(1)

In  this Act  unless  the  context  otherwise  requires,––

Definitions.

Mah.  XLIII
of  2017.

(a)

“appointed date”  means the  date on  which the  Maharashtra Goods  and Services

Tax Act, 2017 comes into force;

(b)

“base  year”  means  the  year  specified  in  section  4  of  the Act;

(c)

“base  year  revenue”  means  the  revenue  collected  by  the  local  authorities  as

specified  in  section  5  of  the Act;

(d)

“compensation”  means an  amount  determined under  section  8  of the Act;

Mah.  XLIII
of  2017.

(e)
Act, 2017;

“Goods  and  Services  Tax Act”  means  the  Maharashtra  Goods  and  Services  Tax

( f )

“local authority” means the local authorities specified in the Schedule of the Act;

(g)
the  Act;

(h)
the  Act;

“projected  growth  rate”  means  the  rate  of  growth  projected  as  per  section  3  of

“projected  revenue”  means  the  revenue  calculated  as  per  sections  6  and  7  of

(i)

“Schedule”  means  the  Schedule  appended  to  the Act.

Mah.  XLIII
of  2017.

(2) Words  and  expressions  used  and  not  defined  in  this  Act  but  defined  in  the

Maharashtra  Goods  and  Services  Tax  Act,  2017  shall  have  the  same  meanings  respectively

assigned  to  them  in  that Act.

1

2

For  Statement  of  Objects  and  Reasons  (in  English)  see  Maharashtra  Government  Gazette,  Part  V-A,

Extraordinary  No.  33,  dated  the  20th  May  2017,  Page  6.

This  Act  was  brought  into  force  by  G.  N.  MGST.  No.  1017/C.R.,  101(1)/Taxation-1,  dated  the
29th  June  2017,  w.e.f.  1st  July  2017.

Projected
growth  rate.

Base  year.

Base  year
revenue.

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Maharashtra  Goods  and  Services  Tax  (Compensation  to
the  Local  Authorities)  Act,  2017

[ 2017 : Mah. XLI

3. The  projected  nominal  growth  rate  of  revenue,  in  perpetuity,  for  a  local  authority

shall  be  8%  per  annum  to  be  compounded  annualy.

4. For  the  purpose  of  calculating  the  compensation  amount  payable  in  any  financial
year  to  a  local  authority,  the  financial  year  ending  on  the  31st  March  2017  shall  be  taken
as  the  base  year.

5.

(1) The base  year revenue for  the Municipal  Corporation of Brihan  Mumbai shall
be  the  revenue  collected  by  it  in  the  base  year,  net  of  refunds,  with  respect  of  octroi  levied
and  collected  under  the  erstwhile  entry  52  of  List-II  (State  List)  of  the  Seventh  Schedule  to
the  Constitution  of  India,  as  it  stood  prior  to  bringing  into  effect  the  provisions  of  the
Constitution (One Hundred and First Amendment) Act, 2016.

(2) The  base  year  revenue  for  a  local  authority  other  than  Municipal  Corporation  of
Brihan  Mumbai,  shall  be  the  revenue  of  the  base  year,  net  of  refunds,  with  respect  to  entry
tax,  octroi,  local  body  tax,  cess  or  any  other  tax  levied  and  collected  under  the  erstwhile
entry  52  of  List-II  (State  List)  of  the  Seventh  Schedule  to  the  Constitution  of  India,  as  it
stood  prior  to  bringing  into  effect  the  provisions  of  the  Constitution  (One  Hundred  and
First Amendment) Act, 2016 :

Provided  that,  if  the  local  authority  is  notified  after  the  financial  year  ending  on  the
31st  March  2016,  then  the  base  year  revenue  for  that  local  authority  shall  be  specified  by
the State Government.

Explanation.–  For  the  purposes  of  this Act,  an  amount  the  local  authority  is  eligible  to
receive,  on  account  of  abolition  of  local  body  tax  in  respect  of  an  importer  having  turnover
not  exeeding  rupees  50  crores  per  annum  from  the  1st August  2015,  shall  form  part  of  the
base  year  revenue.

(3) The  base  year  revenue  for  the  purpose  of  this  section  shall  be  as  audited  by  the

Local  Fund Accounts  Audit  of  the  State.

Projected
revenue  for
first  year.

6. The  projected  revenue  for  the  period  in  the  first  year  for  a  local  authority,  shall
be  calculated  by  applying  the  projected  growth  rate  over  the  base  year  revenue  of  that
local  authority  reduced  by  the  amount  of  revenue  collected,  net  of  refunds,  as  speficied  in
section  5  upto  the  appointed  date.

Projected
revenue  for
any  other
year.

7. The  projected  revenue,  not  being  first  year,  for  any  year  for  a  local  authority,  shall
be  calculated  by  applying  the  projected  growth  rate  over  the  base  year  revenue  of  that
local  authority,  net  of  refunds,  by  applying  the  principle  of  compounded  growth  rate  as
per  section  3.

Illustration.–– If the base year revenue for 2016-17 for a concerned local authority, calculated
as per section 5, is Rs. 200,  then the projected revenue for, say, financial year 2018-19 shall
be  as  follows  :––

Projected Revenue for 2018 ––19 = 200

2

(      )8

1 +

100

Calculation
and  release
of  compen-
sa tion.

8.

(1) The compensation payable to a local authority shall be provisionally calculated
and  released  on  monthly  basis  and  shall  be  finally  calculated  for  every  financial  year  after
the  receipt  of  final  revenue  figures,  as  audited  by  the  Local  Fund Accounts Audit.

3

2017 : Mah. XLI ] Maharashtra  Goods  and  Services  Tax  (Compensation  to

the  Local  Authorities)  Act,  2017

(2) The  total  compensation  payable  for  any  financial  year  to  any  local  authority  shall

be  calculated  as  follows  :––

(a) The projected  revenue for any  financial year shall be  calculated as per  section 6

or,  as  the  case  may  be,  section  7.

(b) The revenue  accruable to  the local authority  shall be  calculated and  which shall

be the revenue accruable on account of the taxes, fees or other sources of revenue assigned
after the commencement of this Act to the local authority by the State Government and the

revenue  accruable  on  account  of  increase  in  rate  of  tax,  amount  of  fees  or  increase  in
rate  of  other  means  of  sources  of  revenue  assigned  before  the  commencement  of  this Act

to  the  local  authority  by  the  State  Government.

Explanation.––  For  the  purpose  of  this  section,  the  revenue  accruable  to  a  local
authority  means  the  revenue  which  the  State  Government  could  have  collected  from  the

area  within  the  jurisdiction  of  that  local  authority  had  the  taxes,  fees  or  other  source  of
revenue  not  been  assigned  to  that  local  authority  and  the  State  in  this  regard  shall,  specify

such  amount  of  revenue.

(c) Total compensation payable in any financial year shall be the difference between
the projected revenue for that financial year and the revenue accruable for that year to a local

authority  as  specified  in  clause  (b).

Illustration

I.  Ist  year

Base year revenue for the year 2016-17.

Projected revenue for 2017-18 i.e. 8% growth.

Less  amount  of  LBT/Octroi  collected  upto  the  date  of
implementation of this Act e.g. 1/4/2017 to 30/6/2017.

Less  accruable  revenue  assigned  for  the  period  from
1/7/2017 to 31/3/2018.

Compensation  payable.

II. Subsequent year

Base year revenue for the year 2016-17.

Projected revenue for 2018-19 i.e. 8% growth.

Less  accruable  revenue  assigned.

Compensation  payable.

100

108.00

20.00

20.00

68.00

100

116.64

30.00

86.64

4

Maharashtra  Goods  and  Services  Tax  (Compensation  to
the  Local  Authorities)  Act,  2017

[ 2017 : Mah. XLI

(3) The  loss  of  revenue  at  the  end  of  every  month  in  any  year  for  a  local  authority

shall  be  calculated  as  follows  :––

(a) The  projected  revenue  that  could  have  been  earned  by  the  local  authority  for
a  monthly  period  of  the  respective  financial  year  would  be  calculated  on  pro-rata  basis
as  a  percentage  of  the  total  projected  revenue  for  any  financial  year,  calculated  as  per
section 6  or 7.

Illustration.––  If  the  projected  revenue  for  any  year  calculated  as  per  section  6  or  7  is
Rs.  100,  the  projected  revenue  that  could  be  earned  for  monthly  period  for  the  purpose  of
this sub-section shall be 100  1/12 = Rs. 08.33.

(b) The  provisional  compensation  payable  for  every  three  months  period  from  the
appointed  date  to  any  local  authority  shall  be  paid  on  or  before  the  fifth  of  the  relevant
month in advance, in any financial year and shall be the amount as calculated in clause (a).
The  amount  of  provisional  compensation  so  payable shall  be  credited  in  the  bank  account
so  designated by  the  Municipal Corporation  of Brihan  Mumbai  on or  before  fifth of  every
month,  in  advance and  failing  which,  the designated  bank  will  be  authorised to  credit  the
account of Municipal Corporation of Brihan Mumbai by an amount of compensation payable
for  that  month  against  the  guarantee  to  be  issued  by  the  State  Government.

(c)

In  every  fourth  month,  the  provisional  compensation  payable  to  any  local
authority  shall  be  the  difference  between  projected  revenue  for  the  fourth  month  and
revenue  accruable  to  a  local  authority  in  the  period  of  previous  three  months  :

Provided  that,  if  the  amount  of  revenue  accruable  to  a  local  authority  in  a  period  of
previous  three  months  is  more  than  the  amount  of  provisional  compensation  payable  in
the fourth month, then the excess amount shall be reduced from the amount of compensation
payable  for  the  fifth  month  and  so  on.

(4)

In case of any difference between the final compensation amount payable to a local
authority calculated as per provisions of sub-section (2) and the total provisional compensation
amount released to a local authority, in the said financial year, as per sub-section (3), the same
shall  be  adjusted  against  release  of  compensation  to  the  local  authority  in  the  subsequent
financial year,  in the manner  to be  specified by the  State Government.

Amendment
of  Schedule.

9. The State Government may, from time to time, by notification in the Official Gazette,
amend  the  Schedule  by  adding  or  modifying  or  deleting  any  entry  therein  and  thereupon
the  Schedule  shall  stand  amended  accordingly,  from  such  date  as  may  be  specified  therein,
for  the  purposes  of  this  Act.

Power  to
make  rules.

10.

(1) The State Government may, by notification in the Official Gazette, make rules to

carry  out  the  purposes  of  this  Act.

(2) Without  prejudice  to  any  provision  made  in  this  behalf,  any  rule  made  under  this
Act  may be  made  so  as to  be  retrospective from  any  date not  earlier  than  the appointed  day.

(3) Every  rule  made  under  this Act  shall  be  laid,  as  soon  as  may  be,  after  it  is  made,
before  each  House  of  the  State  Legislature,  while  it  is  in  session  for  a  total  period  of  thirty
days,  which  may  be  comprised  in  one  session  or  in  two  or  more  successive  sessions,  and  if,
before  the  expiry  of  the  session  in  which  it  is  so  laid  or  the  session  immediately  following,
both  Houses  agree  in  making  any  modification  in  rule  or  both  Houses  agree  that  the  rule
should  not  be  made,  and  notify  their  decision  to  that  effect  in  the  Official  Gazette,  the  rule
shall, from the date of publication of such decision in the Official Gazette, have effect only in
such  modified  form  or  be  of  no  effect,  as  the  case  may  be;  so  however,  that  any  such
modification  or  annulment  shall  be  without  prejudice  to  the  validity  of  anything  previously
done  or  omitted  to  be  done  under  that  rule.

5

2017 : Mah. XLI ]

Maharashtra  Goods  and  Services  Tax  (Compensation  to
the  Local  Authorities)  Act,  2017

(1)

11.

If any difficulty arises in giving effect to the provisions of this Act, the Govern-
ment may, as occasion arises, by an order, published in the Official Gazette, do anything, not
inconsistent with  the provisions  of this Act,  which appears  to it to  be necessary  or expedient
for  the  purpose  of  removing  the  difficulty  :

Power  to
remove
difficulties.

Provided that, no such order shall be made after the expiry of a period of two years from

the  date  of  commencement  of  this Act.

(2) Every order made under sub-section (1) shall be laid, as soon as may be, after it is

made,  before  each  House  of  the  State  Legislature.

SCHEDULE

[See Sections  2(1) (i)  and  9]

(1) Ahmednagar Municipal Corporation

(2) Amravati Municipal Corporation

(3) Aurangabad Municipal Corporation

(4) Akola Municipal Corporation

(5) Bhiwandi-Nijampur Municipal Corporation

(6) Chandrapur Municipal Corporation

(7) Dhule Municipal Corporation

(8)

Jalgaon Municipal Corporation

(9) Kalyan-Dombivli Municipal Corporation

(10) Kolhapur Municipal Corporation

(11) Latur Municipal Corporation

(12) Municipal Corporation of Brihan Mumbai

(13) Mira-Bhaindar Municipal Corporation

(14) Malegaon Municipal Corporation

(15) Navi Mumbai Municipal Corporation

(16) Nashik Municipal Corporation

(17) Nagpur Municipal Corporation

(18) Nanded-Waghala Municipal Corporation

6

Maharashtra  Goods  and  Services  Tax  (Compensation  to
the  Local  Authorities)  Act,  2017

[ 2017 : Mah. XLI

(19) Pune Municipal Corporation

(20) Pimpri-Chinchwad Municipal Corporation

(21) Parbhani Municipal Corporation

(22) Panvel Municipal Corporation

(23) Sangli-Miraj-Kupwad Municipal Corporation

(24) Solapur Municipal Corporation

(25) Thane Municipal Corporation

(26) Ulhasnagar Municipal Corporation

(27) Vasai-Virar Municipal Corporation

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