The biggest dent of Rs 60 crore will come in the form of reduction of octroi on petrol and diesel. PMC hopes by increasing octroi duty on cars, steel and imported luxury items, it will be able to mitigate the loss to some extent.

With an increase of one per cent octroi on the cars priced below Rs 10 lakh, the PMC will earn an additional amount of Rs 13-14 crore. Half a per cent increase (2.5 to 3) on steel charges, will enable it to gross about the same amount. Two per cent hike (5 to 7) on luxury items will make civic administration earn an extra Rs 3 to 4 crore.

The PMC general body on Monday gave approval to the restructuring of the octroi system for the year 2008-09.

Talking to reporters about the changes in the system, PMC octroi chief K C Karkar said, “Due to the reduction in the octroi charges, we will have to bear a loss of Rs 60 crore. Though we will be able to recover some share through the hike in octroi charges on cars, steel and luxury items, difference of Rs 30 to 40 crore will always remain.”

In a move which will gladden the hearts of environmentalists and cycle-lovers, the civic body has decided to levy no octroi on bicycles.

When the discussion on octroi started during the general body, corporator Avinash Shinde demanded explanation from the civic administration for the proposed inspection checks in big shops.

To this, Municipal Commissioner Praveensinh Pardeshi said, “In near future, the octroi will be abolished which could possibly be replaced by the cess-based system. This cess-based system demands inspection checks in shops. Mumbai and Pimpri-Chinchwad have already started moving towards this. Hence, in order to get ready for the new system, we too need to adopt the element of sudden inspections checks.”

However, the elected members unanimously opposed the move. Corporator Ujjwal Keskar objected to the ongoing system of levying octroi on the value added tax (VAT).

Octroi on the imported equipment - chemicals, steel, machines, and surgical and electronic items - has been reduced to three percent from seven percent. Kerosene will become cheaper as its octroi duty will be reduced by a percent. There will be no change in rates of gold.

Karkar said, “No octroi will be charged on the goods that is once taken out of the city limits for sale but gets rejected. The amount of compromise fee has been hiked up to four per cent from the present one percent.”