1
Municipal Finances,
Resource Mobilisation
and Municipal Budget
B. RAMESH BABU
ADDITIONAL DIRECTOR OF MUNICIPAL ADMINISTRATION ,
O/O C&DMA , ANDHRA PRADESH.
Financial Resources of ULBs
External
Plan
Non-Plan
Loans
Internal
Taxes
Non-Taxes
Public
Contribution
NGO
Grants from
International
Institutions
Municipal
Funds
2
General Trends of Constituents of Income in
Urban Local Bodies
*Non Plan Grants
Include 13th Central
Finance Commission
Grants.
3
Municipal Own
Revenues(Taxes and
Non Taxes) Occupy
the Lions Share (54%)
Taxes and Non-Taxes in ULBS
Non - Taxes 4
Taxes
*
Property Tax
*
Water Charges
*
Advertisement Tax
*
*
Vacant Land Tax – 0.5%/0.2%
Fees from Markets and
Slaughter Houses.
*
Profession Tax
*
Rents from shops
Municipality – 95%
*
Various Categories of License
Fees
Entertainment Tax
*
Encroachment Fees
Municipality – 90%
*
Contribution for water supply
connections
Collection Charges to commercial – 3%
*
Building permission Fee
Transfer duty on property
*
Layout Charges
Municipality – 95%
*
Leases from Tanks and lakes
*
User Charges
Collection Commercial Tax Dept – 5%
*
Film Chambers – 7%
*
Collection Dept.(Registration Dept)– 5%
Property Tax

Rate of Property Tax not exceed including LC & ET.
- Residential Buildings 25% of ARV
- Non-Residential Building 33% of ARV
- Corporations

Components of Property Tax
- General Purpose
- Water and Drainage
- Lighting
- Scavenging

Assessment of Property Tax
- Based on ARV

Fixation of ARV with reference to
- Location of the building
- Type of Construction
- Plinth Area
- Age
- Usage
5
Property Tax

Zoning based on location
6
The entire Municipal area is to divide into convenient territorial zones with
reference to expected rental values based on;
- Civic Amenities
- Markets and Shopping Centers
- Education and Medical Institutions
- Banks and Public offices
- Factories and Industries

Classification of Buildings
a.
RCC Posh
b.
RCC Ordinary
c.
Madras Terraced or Jack Arch roofed or stone or slabs or states roofed
buildings.
d.
Mangalore tiled roofing or Asbestos roofing or G. I. Roofed buildings.
e.
Country tiled buildings
f.
Huts
g.
Any other buildings not covered above
Property Tax
Usage of the Buildings
a. Residential
b. Shops, Shopping Complexes
c. Public Use
- Offices complexes, public and private offices and banks
- Hospitals and Nursing Homes
- Educational Institutions
d. Commercial purposes
- Hotels, Lodges, Restaurants
- Godowns and other business establishments
e. Industrial purpose
- Factories, Mills, Workshops and other industries
f. Cinema theatres or places of public entertainment
g. Any other use not covered above

7
Property Tax …. Contd…

Allowances
Age of the building
Allowances
25 years below
10 % of building ARV
25 to 40 years
20 % of building ARV
Above 40 years
30 % of building ARV
Rebate on owner occupied residential
40 % of building ARV
buildings

Exemptions
- Public Warship
- Choultries
- Ancient Monuments
- Charitable Hospitals
- Hospitals and Dispensaries maintained by Railway Station
- Burial and burning grounds
- Municipal Buildings
- Irrigation Works vested with Government
-( Recognized Education Institutions )
8
Property Tax … Contd…
9
Exemptions.. Contd..
Owner occupied residential buildings are exempted from payment of
property tax by a council resolution if ARV doesn’t exceed.
- Municipal Corporations -
Rs.900/-
- Sel & Spl Grade Mpltys
-
Rs.450/-
- Other Mpltys
-
Rs.300/-
Houses constructed through weaker section housing programmes by
State Government has to collect Rs.1/- for every half year.

Vacant Land Tax
- Mpl Corporations
- Mpltys/N.Ps

Advertisement Tax
- Hordings
- Uni poles
- Lolly Pops etc.,
-
0.5% of Capital Value
0.2% of Capital Value
Non Taxes
- WATER CHARGES
- FEE FROM MARKETS AND SLAUGHTER HOUSES
- RENTS FROM COMMERCIAL COMPLEXES AND SHOPS
- TRADE LICENSE FEE
- BUILDING PERMIT FEE
- ENCROACHMENT FEE
- BETTERMENT / DEVELOPMENT CHARGES
- CONTRIBUTIONS TO WATER SUPPLY CONNECTIONS
•
OTHER NON TAXES
- FEES FOR ISSUE OF BIRTH & DEATH CERTIFICATE AND EXTRACTS OF RECORDS
- SALE PROCEEDS OF SWEPT MATERIAL / COMPOST
- LEASE AMOUNT OF WATER TANKS AND LAKES
- MAGISTERIAL FINES
- SALE OF FORMS
- AMOUNT REALIZED FROM AUCTION OF UNSERVICEABLE MATERIAL
- BURIAL GROUND CHARGES, ETC.
10
Assigned Revenues
•
ENTERTAINMENT TAX
-
90% OF ET COLLECTED BY COMMERCIAL TAX DEPT
•
SURCHARGE & STAMP DUTY -2% OF THE VALUE OF THE INSTRUMENT COLLECTED
BY STAMPS AND REGISTRATION DEPARTMENT.
•
PROFESSIONAL TAX
-
GHMC, GVMC & VMC
- REMAINING ULBS ARE NOT GETTING.
•
NON-PLAN GRANTS
-
GHMC, GVMC & VMC
- PER CAPITA GRANT
- MOTOR VEHICLES TAX COMPENSATION
- PROPERTY TAX COMPENSATION
- OCTROI COMPENSATION
•
NON-PLAN GRANTS COMMON TO ALL ULBS
- MAINTENANCE OF ROADS
- ESTABLISHMENT COST OF MUNICIPALITIES / CORPORATIONS
11
Plan Grants of ULBs
•
JAWAHARLAL NEHRU NATIONAL URBAN RENEWAL MISSION (JNNURM): 4 COMPONENTS
- UI&G
- BSUP
- UIDSSMT
- IHSDP
•
(APMDP) – WORLD BANK-FUNDED PROJECT
- SJSRY/NULM
•
INDIRA KRANTHI PADHAM (URBAN)
•
STATE FINANCE COMMISSION (SFC) GRANTS
•
MUNICIPAL INTERNAL ROADS
•
ASSISTANCE THROUGH INTEREST-FREE LOANS
•
ASSISTANCE TO NEW MUNICIPALITIES FOR DEVELOPMENTAL WORKS
•
SUPPORT FOR PROGRAMME FOR WATER SUPPLY
•
INTEGRATED LOW COST SANITATION (ILCS)
•
SUPPORT FOR PROGRAMME FOR INFRASTRUCTURE
•
PROVISION OF BASIC FACILITIES IN MUNICIPAL SCHOOLS
•
FENCING OF PARKS AND PLAYGROUNDS IN ULBS
•
GRANTS UNDER BACKWARD REGIONS GRANT FUND
•
RAJIV AWAS YOJANA
12
Other Sources / Initiatives
•
LOANS
-
-
HUDCO
BANKS
•
TAX FREE BONDS
•
TAX ON LAND VALUE INCREMENT (LVIT)
•
SPECIAL ASSESSMENT DISTRICTS (SAD)
•
VALORIZATION CHARGES
•
DEVELOPMENT IMPACT EXACTION
•
TAX ON INCREMENTAL FINANCING
13
Improvement of Revenue Resources
14
•
ENSURE ASSESSMENT OF ALL BUILDINGS AS PER NORMS
•
IDENTIFICATION OF
CORRECT THEM.
•
ENSURE TIMELY REMITTANCE OF COLLECTIONS BY THE COLLECTION
STAFF.
•
ABC ANALYSIS OF DEMAND AND ARREARS.
•
FIXING OF TARGETS TO THE COLLECTION STAFF AND SEE TO ACHIEVE
THEM.
•
CROSS VERIFICATION OF ASSESSMENT WITH ELECTRICITY DEPARTMENT
CONNECTIONS LISTS AND WITH COMMERCIAL TAX DEPARTMENT.
•
CO-RELATE NON-RESIDENTIAL ASSESSMENT DATA WITH TRADE LICENSES
DATA
•
EXTEND THE INFORMATION ON UN-AUTHORIZED CONSTRUCTION TO
THE REVENUE SECTION AND VICE VERSA.
•
COMPUTERISATION OF ALL TAXES AND NON-TAXES – SHIFT THE DATA
ENTRY OPERATORS OF REVENUE SECTION THOSE WHO ARE LONG
STANDINGS TO OTHER SECTIONS.
•
ENHANCE THE COVERAGE OF TAX NETWORK OF THE MUNICIPALITIES.
•
ARREST THE MISAPPROPRIATION AND LEAKAGES.
UN-ASSESSED
AND
UNDER
ASSESSED
AND
Municipal Budget
15
Budget Calendar for Municipalities
16
ACTIVITY
NOT LATER THAN
•
BUDGET INITIATION
25TH SEPTEMBER
•
INSTRUCTIONS TO SECTION HEADS
01ST OCTOBER
•
DRAFT BY SECTION HEADS
10TH OCTOBER
•
COMPILATION AT ACCOUNTS SECTION
25TH OCTOBER
•
DRAFT BEFORE COUNCIL
07TH NOVEMBER
•
CIRCULATE AGENDA TO THE COUNCILLORS
08TH NOVEMBER
•
COUNCIL APPROVAL
15TH NOVEMBER
•
IF NOT APPROVED IN 1ST MEETING
22ND NOVEMBER
•
SUBMISSION TO COLLECTOR
31ST DECEMBER
•
FORWARDING BY COLLECTOR TO C&DMA
15TH JANUARY
Budget Calendar for Corporations
17
ACTIVITY
NOT LATER THAN
•
BUDGET INITIATION
25TH SEPTEMBER
•
INSTRUCTIONS TO SECTION HEADS
01ST OCTOBER
•
DRAFT BY SECTION HEADS
10TH OCTOBER
•
COMPILATION AT ACCOUNTS SECTION
25TH OCTOBER
•
DRAFT BEFORE STANDING COMMITTEE
10TH NOVEMBER
•
REVIEW AND APPROVAL OF STANDING COMMITTEE
AND PLACE BEFORE THE CORPORATION
10TH DECEMBER
•
CIRCULATION TO CORPORATORS
15TH DECEMBER
•
APPROVED BY THE CORPORATORS
20TH FEBRUARY
•
SUBMISSION TO GOVERNMENT
01ST MARCH
Income & Expenditure 2009-10 to 2013-14
Rs.in crores
18
2392.65
2013-14
2882.49
2182.40
2012-13
2716.35
1925.97
2011-12
2325.35
1847.37
2010-11
2235.62
1631.82
2009-10
0.00
2051.10
500.00
1000.00
1500.00
2000.00
Expenditure
Income
2500.00
3000.00
3500.00
Property Tax Collection-2009-10 to 2013-14
19
Rs.in crores
716.78
701
624.23
568.65
531.2
625.42
539.8
466.67
413.57
2009-10
401
2010-11
2011-12
Demand
Collection
2012-13
2013-14
WORST PRACTICES
Nandyala
Yemmignur
Machilipatnam
Nidadavole
Rajampeta
Kakinada
Gajuwaka etc.,
20
21
Thank you