Part IXA: The Municipalities

Article 243X: Power to Impose Taxes by, and Funds of, the Municipalities

Original Article:

The State Legislature may authorize Municipalities to levy, collect, and appropriate taxes, duties, tolls, and fees, and create funds for crediting and withdrawing money for urban governance.

Amendments:

Article 243X, introduced by the 74th Amendment Act of 1992, empowers Municipalities with financial autonomy to perform their functions effectively.

Explanation:

Article 243X provides the framework for Municipalities to generate and manage their financial resources, ensuring their sustainability and independence in urban governance.

Clause-by-Clause Explanation:

1. Levy and Collection of Taxes: Municipalities can impose taxes such as property taxes and sanitation fees, generating revenue for public services.
2. State-Assigned Taxes: State Legislatures can assign certain state-collected taxes, such as entertainment taxes, to Municipalities.
3. Grants-in-Aid: Municipalities can receive financial support from the State Consolidated Fund.
4. Creation of Municipal Funds: All revenue and expenditures of Municipalities must be managed through dedicated municipal funds for transparency.

Legislative History:

The 74th Amendment addressed financial challenges faced by urban local bodies by empowering Municipalities to independently manage and generate funds.

Real-life Examples:

• In Bengaluru, the Bruhat Bengaluru Mahanagara Palike (BBMP) collects property taxes, which form a significant portion of its revenue.
• The Pune Municipal Corporation (PMC) utilizes grants-in-aid from the Maharashtra State Consolidated Fund to finance large-scale infrastructure projects.

Debates and Deliberations:

During discussions on Article 243X:

• Dr. Manmohan Singh stressed the importance of financial autonomy for effective urban governance.
• Ms. Sushma Swaraj emphasized the need for accountability in managing municipal funds.