Maharashtra plans to transfer professional tax collection rights to local bodies

Mumbai: In a move aimed at addressing the revenue deficit faced by local bodies after the abolition of octroi and the introduction of Goods and Services Tax (GST), the Maharashtra government is considering transferring the rights to collect professional tax to municipal bodies.

On Monday, the state government issued an order announcing the formation of a committee of officials from the tax and finance departments to study the ‘Gujarat Pattern’ of professional tax collection. The committee has been tasked with submitting its report within 20 days.

Currently, the state government collects professional tax from salaried individuals and various professionals through the GST Commissioner’s office. In the financial year ending March 2025, the government collected approximately ₹2,800 crore through this tax. Now, it is exploring the possibility of handing over the collection rights to local governing bodies to strengthen their financial resources.

“With rapid urbanisation in Maharashtra, the burden on local bodies to provide civic services has significantly increased. They require additional sources of revenue to meet these growing demands. Transferring professional tax collection rights to local bodies will offer a stable and substantial revenue stream,” the order stated. It also noted that states such as Kerala, Tamil Nadu, and Gujarat have already implemented similar measures.

The committee’s mandate includes examining the legal framework adopted by Gujarat during the transfer of tax collection rights, the implementation of IT systems for online payment collection by local bodies, the transition process, and other associated issues.

Additionally, the committee will study the financial impact of the transfer on local bodies in Gujarat and assess how it has influenced their functioning and service delivery. The findings are expected to guide Maharashtra’s approach towards empowering its municipal bodies with new revenue-generating avenues.