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Can someone demystify LBT ( new tax ) ?

A casual meet up at a friends office brought up the Discussion of LBT and from whatever I heard it sounds pretty scary.  Even if my company is not selling any goods , I have to register my business for LBT since we have the Shop and Establishment certificate. 

And we need to maintain LBT  ‘paid’ for everything the company buys.  

Is this true ? And we need to file monthly returns ?  This Law is going to apply from October ? 

Can someone please demystify what is this LBT crap all about in simple words ?


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  1. What is LBT?

    LBT is the tax on entry of goods for use / consumption within areas of the local civic bodies. It is a self assessment or account based method of paying local tax, where the businessmen or trader himself declares his tax liability. Unlike in the octroi regime, trucks carrying goods will not be subjected to physical checking at check posts.

    How does LBT work? 

    It works differently from the octroi system. Traders have to compile a list of all goods procured within the month, feed the matter into the software provided by the civic body to check their LBT liability. They have to make payment once every 40 days using online portals, cheque, demand draft or cash through a designated bank or counters of the civic bodies.

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