Demonetisation helps Maharashtra government recover tax dues

Collections rise as tax defaulters were allowed to pay the arrears in scrapped notes


Except for government hospitals and medical stores, the value of old currency notes has become zero. Photo: PTI
Except for government hospitals and medical stores, the value of old currency notes has become zero. Photo: PTI

Mumbai: The centre’s demonetisation move has helped Maharashtra government recover a good amount of long-pending dues by way of local taxes in the past 15 days, especially for the urban and rural development departments as the defaulters were allowed to pay the arrears in scrapped notes, according to senior officials.

While the urban development department netted around Rs1,100 crore collection by other departments like rural development and water resources also picked up during the fortnight, they said. “The urban local bodies have been facing the problem of chronic defaulters. The recovery of dues was important and significant manpower of the state was involved in litigations. The demonetisation decision gave Maharashtra urban development department an opportunity to get the dues cleared as people were willing to pay their outstanding taxes in cash,” UDD’s principal secretary Manisha Patankar-Mhaiskar told PTI.

“The proposal (to allow the people to pay the dues in scrapped notes) was moved to the chief secretary as well as chief minister’s office who succeed in getting the centre’s approval for tax payment,” said Mhaiskar. “We are collecting the taxes that were due till 8 November. Advance tax payment is not allowed,” she added. There are 26 municipal corporations and around 450 municipal councils and nagar panchayats in Maharashtra. Similarly, the rural development department also decided to cash in on the opportunity and recover the dues. “Except for government hospitals and medical stores, the value of old currency notes has become zero. We realised that there is a lot of cash with people and they cannot stand in queue for its exchange. We decided to cash in on it as our dues were virtually non-recoverable,” a senior IAS official of the department said.

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“There were hundreds of litigations across the state for various types of tax recoveries but the recovery achieved in last 15 days is way ahead of the other methods routinely used for tax recovery,” he added. “Another big sector in terms of recovery is rural development, where tax dues of gram panchayats are not recovered for decades. Compared to UDD, there are some 28,000 gram panchayats in the state where the problem is prevalent.

“The department is compiling the figures as last date of payment of property tax and other similar dues is 24 November. The final figures will be out in next couple of days,” a deputy secretary of the RDD said. The state Water Resources department along with Maharashtra Jeevan Pradhikaran, which manages all the water supply schemes in the state, also came up with government resolutions in the last week, appealing to their defaulters to pay the pending dues using demonetised currency notes. “The water resources ministry was also facing similar challenges of recovery of water bills. The demonetisation has helped us in improving the recovery of such bills,” said Maharashtra water resources minister Girish Mahajan.

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