Income source of Grampanchayats in Telangana State

Income Sources of Gram Panchayat

1. Introduction

Every Government will have their source of income. Without income the government cannot do any developmental or welfare activities. In the same analogy the grampanchayat as local government is having source of income. And income so received by the Grampanchayat has to incur on providing amenities to the villagers. The mobilizing the resources and its expenditure in a correct way is called “Financial Management”. To learn about Financial Management of the Gram Panchayat, first we have to know the income sources of Gram Panchayat and expenditure to be incurred for providing the civic amenities to the public. It is also important to know how to prepare a budget of Grampanchayat, procedures for auctioning, work execution, etc. that are explained hereunder.

2. Income Sources of Gram Panchayat Telangana Panchayat Raj Act, 2018 provides to levy and collect the taxes, non- taxes and fees, to improve the financial status of Gram Panchayats. The income source of Grampanchayat can be dived in to 4 categories.

1. Own Sources
2. Assigned Revenues
3. Government Grants
4. Donations, unclaimed deposits

2.1. Own Sources:

Own source means, the taxes and not taxes, which can levy and collect by the grampanchayat, are called its’ own sources. The own sources may be divided in to two categories. i.e.

1.  Taxes
2.  Non-Taxes.

The Taxes that can be levied by the Grampanchayats are shown under Section 64 of the Act. These taxes are divided in to two categories like Mandatory Taxes and Obligatory taxes. There are three types of Mandatory taxes.

A.1. Mandatory Taxes

1. House Tax
2. Kolagaram or Kata Rusumu
3. Other tax as Government may direct

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A.2. Obligatory taxes

Obligatory taxes may also be levied by the Gram Panchayat to augment its sources to provide more facilities to the citizens.

1. Tax on agricultural land for specific purpose. (Sec.64(2)(i))
2. Fees for use of Porombokes. (Sec.64(2)(ii))
3. Fees for occupation of building and Chavidies. (Sec.64(2)(iii))
4. Special taxes. (Sec.64(2)(iv))
5. Use charges. (Sec.64(2)(v))
6. Encroachment fee (Land Rent). (Sec.64(2)(vi))
7. Surcharge on Agricultural land. (Sec.64(3))
8. Education tax U/s 37 of Education Act,1982. (Sec.64(3))

B.1. Non-Taxes:

1. License fee. (Sec.99)
2. Layout Fee. (Sec.113)
3. Building Permission Fee, (Sec.114)
4. Compounding fees and penalties((Sec.129(1))
5. Monthly water Tap charges (if maintained by the Grampanchayat.)
6. Market fees ((Sec.98)
7. Share of Endowment trusts. (Sec.113)
8. Interests on investments
9. Warrant fee (Rule.26)
10. Others

B.2. Auctions:

1. Weekly Markets (Sec.98)
2. Daily markets.
3. Fishery rentals
4. Usufructs
5. Ferries. (sec.61)
6. Slaughter houses. (Sec.110)
7. Poromboke lands leases
8. Unserviceable articles

2.2. Assigned Revenues

1. Share in irrigation water tax
2. Share in lease of fishery rental in Irrigation tanks
3. Share in state taxes levied under Goods and Service Tax

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2.3. Grants

Grants are two types one is Ordinary Grants and other is Special Grants.

2.3.1. Ordinary Grants

1. Incentive grants for Unanimous election of Gram Panchayat.

2.3.2. Special Grants

1. State and Central Finance Commission Grants
2. National Rural Health Mission Grant.
3. Rastriya Grameena Swaraj Abhiyan grants
4. MGNREGS Grants
5. Honorarium to Sarpanchas

2.3.3. Special Taxes:

The Gram Panchayat is empowered to levy special taxes, under section 67 of the Act, to meet the expenditure on maintenance of, water supply, drainage and lighting system on public roads or at public places and other similar work.

The cost of facilities provided by the Grampanchayats, to the citizens has to bare by the Grampanchayat. Therefore to meet the additional expenditure to provide facilities like street lights, Water supply and drainage, the Grampanchayat has to levy special Taxes (User charges) on the basis of no loss no gain system. The rate at which special taxes is to be levied, shall be decided by the Grampanchayat with the approval of Grama Sabha. No other authority’s sanction is needed in this regard.

The procedure to levy and collect the special taxes are illustrated hereunder.

• Before levy of user charges on streetlights, water supply and drainage the Grampanchayat has to prepare the expenditure incurred on providing such amenities and the income derived from each category, for the last three years. The budget estimate of the year for which the special tax is going to be levied has also to be taken in to consideration, for levy of such special Tax.
• The rate of tax and from which year it is going to be levied and for which years the said tax is going to be levied, has to be decided in a special meeting, in which more than half of the member should have to be attended.
• The income of derived from the levy of special tax shall be incurred on that specific purpose only.
• The accounts of special tax shall be maintained in separate cash book along with main cash book.
• No separate account shall be opened for this purpose.
• Separate demand register shall be maintained for each special tax.

2.3.4. Kolagram or Katarusumu:

The Grampanchayat is empowered to levy the Kolagaram or Kata Rusumu on village produces, as per the clause (b) of subsection (1) Section 64 of the Act. But the rates for levy of Kata Rusumu was fixed in Grampanchayat Act, 1964 during the year 1979 and in the Panchayat Raj Act, 1994, the same rates were revised during the year 1995, the revised rates were rescinded by the then government and retained old rates, which were fixed in the year 1979.Therefore the same rates are not feasible to levy and collect Kolagaram or Kata Rusumu, now in the villages.

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2.3.5. Tax on agriculture land for specific purpose:

The Grampanchayat can also levy and collect the tax on agriculture land for specific purpose, to implement special programmes like repair of canals irrigation tanks, to improve the irrigation sources, medical facilities, Education, construction of buildings for cultural activities, construction of culverts, roads, activities to protect the crops.

Before levy of Special Tax on agricultural lands, is to be decided by the Grampanchayat, in a special meeting, purpose for which, and the rate of the tax is going to be levied and the period for which the tax is to be levied. After of approval of the purpose, rate and period of levy, in Grampanchayat and Grama Sabha, the proposal should be submitted to the District Collector for approval, along with following.

1. Details of income and Expenditure, head wise for last three years.
2. Budget estimates for the year in which the tax is to be levied
3. Proposed expenditure on specific purpose and income would be derived by levy of such tax
4. Resolution of Grama Sabha.
5. On verification of proposal the Collector shall decide the rate of tax to be levied
6. Tax shall come in to force from the 1st day of financial year in which it is approved by the Collector.
7. The details of land holders name shall be obtained from the Village Revenue Officer and the tax shall be levied and collected accordingly.
8. Income derived from such tax shall be incurred for such specific purpose only.
9. The rules to levy and collection of taxes shall also apply to this tax also.

2.3.6. License fee:

Grampanchayat is also having power to levy and collect the license fee in accordance with sections of 98, 99 and 112 of the Telangana Panchayat Raj Act, 2018

When a license is granted under section 99, the Grampanchayat, may levy, up to 15% of the gross income of the owner, for last year, from that market. (Section.100).

The Gram Panchayat may notify, under the Section 112 of the Act, that no place in village, shall be used, without the license of Grampanchayat, for the list of activities, in accordance with rules issued there under.

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3. Preparation of Budget

According to Section 73 of the Telangana Panchayat Act, 2018, every Grampanchayat must prepare annual budget estimates taking into consideration, with its probable income and expenditure for the next financial year. Assessing the correct income sources and expenditure to be incurred in coming year is most important aspect on the part of grampanchayat. Assessing income and expenditure is called budget. The development of Grampanchayat depends on its preparation of Budget. Therefore, it is most important subject. Hence, we must learn how to prepare and sanction of Budget of Grampanchayat.

Every year in the month of November, the Grampanchayat has to prepare the Budget with probable income and Expenditure for the coming financial year, by assessing the income and expenditure correctly, taking in to consideration of actual income and expenditure, head wise, for the last 6 months commencing from April to September of current year, i.e. in which financial year the budget is going to be prepared.

After preparation of Budget, it shall be placed before the Grama Sabha for its consideration and approval. After approval of budget by the Grama Sabha, it shall be sanctioned, by the Grampanchayat, within one month, without any deviation.

If the Grampanchayat does not sanction the budget with in stipulated time of one month, the budget approved by Grama Sabha shall be submitted to the Extension officer, P.R& R.D, who shall sanction the budget with such modification as he may deems fit.

The budget is so sanctioned by the Gram Panchayat, be forwarded, to the Extension Officer (PR&RD). The Extension Officer (PR&RD) shall make such suggestions or modifications as he may deem fit and return it within one month from the date of its receipt, to the Gram Panchayat. The Grampanchayat shall consider the same and approve the budget, in a special meeting convened for the purpose and the Budget so approved at such meeting shall be final. Finally sanctioned copy of Budget shall be forwarded to the District Audit Officer.

If the Extension Officer (PR&RD) fails to give the approval within the prescribed time above, the budget is deemed to have been scrutinized. Failure to scrutinize the budget, the concerned Extension Officer (PR&RD) is liable for disciplinary action, after providing an opportunity to him.

If during a financial year, a Gram Panchayat finds it necessary to alter the figures shown in the sanctioned budget with regard to its receipts or to the distribution of the amounts to be expended on the different services to be undertaken by it, a supplementary or revised budget may be sanctioned as provided in the Budget proforma.

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It may be noted that while preparing the Budget Closing balance shall be less than 5% of the total gross annual income of the Grampanchayat. Same is called working balance. After preparation of budget it shall be got copied in required number and shall be circulated among all the members well in advance before presenting it before the grampanchayat for the first time, so that the members can verify allocation amount to required head of expenditure and also details of income to be received by the grampanchayat.

The Sarpanch and Panchayat Secretary should be aware of following points, while going to incur expenditure.

• Do not incur expenditure on the item which are not included in the budget. If it is found in the audit the entire amount incurred on that item shall be under objection.
• Do not incur the expenditure on any head, over above amount allocated amount in the budget.
• If it is found necessary to incur the more than the amount allocated in the budget, it shall be placed before the Grampanchayat and approval may be obtained for enhancing the budget allocation and same may be got approved by Extension Officer P.R&R.D.
• Any grants released to the Grampanchayat by the Government for implementation of any schdiv>eme, the same is to be incurred in accordance with guidelines given by the Government.

4. Types of Auctions

1. Weekly Markets
2. Daily markets
3. Fishery rentals
4. Usufructs
5. Ferries
6. Slaughter houses
7. Poromboke lands leases
8. Shopping complexes and
9. Unserviceable articles

4.1. Auction Duration

Grampanchayat as independent government has empowered to augment its own sources. The auctions are most important source of income to the Grampanchayat. The auctions can be divided, in to 3 types by way of its duration. Out which one is no duration such as Unserviceable articles, daily newspapers, fallen tree wood and damaged electrical items. The second one is having some duration. Auctions which will have duration are two types, one is annually auctions, such as weekly markets, daily markets, fishery rentals, slaughter houses, Ferris, and second is more than one year duration, like shopping complexes and porambokes lands and usufruct land

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4.2. Auction Procedure

The Grampanchayat has to decide whether the collection of market fee, is to be done through departmentally or by leasing.to a third person. If the grampanchayat decides to lease it out on conducting open auction, proposal shall be sent to Divisional Panchayat Officer to obtain upset price of the bid amount of auction to be conducted.

For sending proposal to Divisional Panchayat officer, fallowing information should have to be submitted along with proposal.

1. Resolution of gram panchayat.
2. Last three years income derived from the leasing out of said auction.
3. In case of new market opened and fee collected through departmentally, the amount derived from departmental collection.

• On receipt of upset price, the Panchayat secretary shall prepare auction notice with condition and specifications as decided by the grampanchayat.
• Rates shall be decided by the grampanchayat
• Area of operation and period of lease shall be noted in the tender notice itself.
• Payment of installment shall be indicated
• Amount of deposit for entering the auction hall shall be fixed by the Grampanchayat.
• After completion of auction deposit made by participants, at the time of beginning the auction, by retaining the highest and second highest bidder, shall be returned
• After Auction is over the highest bidder has to deposit ¼ of auction amount with in time to be specified.
• Failure make payment of ¼ of auction amount will lead to forfeiture of deposited amount made at the time of auction and liable to cancel the bid, and 2nd highest bidder shall be asked to make payment of 1/4
• If the 2nd bidder is not willing to take the lease, fresh auction shall be conducted.
• Before letting out the lease order, agreement shall be made, with terms and conditions and got registered with the cost of bidder
• If the auction is for period of one-year, remaining amount shall be collected in 9 equal installments by 31st December.
• During period of lease, if the bidder fails to make payment of installments for 2 consecutive months, lease shall be terminated and again auction shall be conducted for remaining period.
• Rent and charges of land or place,if any has to be borne by the bidder.

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