Part IX: The Panchayats

Article 243H: Powers to Impose Taxes and Funds of Panchayats

Original Article:

The Legislature of a State may, by law, —

• (a) authorize a Panchayat to levy, collect, and appropriate such taxes, duties, tolls, and fees in accordance with such procedure and subject to such limits;
• (b) assign to a Panchayat such taxes, duties, tolls, and fees levied and collected by the State Government for such purposes and subject to such conditions and limits;
• (c) provide for making such grants-in-aid to the Panchayats from the Consolidated Fund of the State; and
• (d) provide for the constitution of such Funds for crediting all monies received by or on behalf of the Panchayats and also for the withdrawal of such monies therefrom, as may be specified in the law.

Amendments:

• Introduced by the Constitution (Seventy-third Amendment) Act, 1992, effective from 24th April 1993.

Amendment Explanation:

Article 243H empowers Panchayats with fiscal autonomy, allowing them to collect taxes, receive grants, and manage funds independently for efficient local governance and development.

Explanations:

Article 243H empowers Panchayats to generate revenue by levying taxes, duties, tolls, and fees. It also enables the State Government to provide grants and allocate funds for efficient functioning and development.

Historical Significance:

Article 243H, introduced through the 73rd Amendment, marked a significant step in decentralization by granting financial autonomy to Panchayats, ensuring grassroots development and effective governance.

Debates and Deliberations:

• Shri P. V. Narasimha Rao: Stressed the importance of financial autonomy for Panchayats to ensure they can effectively address local issues.
• Shri Manohar Joshi: Highlighted the need for accountability in the collection and utilization of taxes by Panchayats.

Real-Life Examples:

• Kerala: Panchayats levy property taxes to fund infrastructure and development projects.
• Maharashtra: Panchayats utilize grants-in-aid for water conservation initiatives in drought-prone areas.

References:

• The Constitution (Seventy-third Amendment) Act, 1992.
• State Panchayati Raj Acts.