Small BusinessNavi Mumbai body asks banks to pay cess on gold deals
Public and private sector banks in the Navi Mumbai municipal area which have done gold transactions, will have to pay 1 per cent account-based cess on the total turnover. The Navi Mumbai Municipal Corporation (NMMC) could be the first civic body in the country to recover such a cess on gold transaction.
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Transactions of gold items like coins, biscuits, chips and bullion to customers, including jewellers attract cess, a tax levied on the entry of goods in the local market. A cess is an alternative to the octroi duty.
NMMC has served notices to 150 branches of 25 banks for the non-payment of cess during 2000-2009. Since 1996, the civic body has been authorised to collect cess from private and government sectors.
According to NMMC, these banks clocked a turnover of Rs 800-900 crore during the last nine years. Banks would have to pay a total of Rs 18 crore for this period. This comprises a cess of Rs 9 crore, or 1 per cent of the total turnover, and another Rs 9 crore for delayed payment.
Indian Banks’ Association (IBA) sources said they were not aware of the recovery of cess from banks on gold transactions. They added that IBA had not received any representation from banks in this regard.
“The Navi Mumbai Municipal Corporation could be the first civic body to recover such a cess on gold transaction. These banks are registered with the civic body but, may be due to their ignorance, they have not paid cess during the last nine years. However, it is mandatory for banks to pay the cess. The civic body is able to find out non payment of cess on gold transactions after carefully examining their balance sheets,” said NMMC deputy commissioner Mahavir Pendhari.
“So far, the civic body could identify a turnover Rs 350 crore in gold transactions by going through the balance sheets of some of the banks. By the end of January or early February, we will be able to cover balance sheets of the remaining banks. Our estimate is that the total transaction would be close to Rs 900 crore,” he added. Pendhari informed that the civic body had received a boost after the High Court recently dismissed a petition filed by the Andhra Bank against the recovery of cess on gold transactions.
The high court has directed the Andhra Bank to approach the assessing officer of NMMC to give a bank guarantee on the payment of cess.
Meanwhile, a state government official said that other municipal bodies in Mumbai, Thane, Pune and Nagpur might follow the NMMC move to recover the octroi duty on gold transactions done by banks in their respective jurisdiction.
Pendhari said the civic body would not charge a penalty of 10 times of the turnover clocked by these banks but they would have to pay the 2 per cent interest rate for delayed payments.