Municipal Finances, Resource Mobilisation and Municipal Budget

1. Municipal Finances, Resource Mobilisation and Municipal Budget B. Ramesh Babu Additional Director of Municipal Administration , O/o C&DMA , Andhra Pradesh.

3. General Trends of Constituents of Income in Urban Local Bodies Municipal Own Revenues(Taxes and Non Taxes) Occupy the Lions Share (54%) *Non Plan Grants Include 13th Central Finance Commission Grants.

4. Taxes and Non-Taxes in ULBS Non - Taxes • Water Charges • Fees from Markets and Slaughter Houses. • Rents from shops • Various Categories of License Fees • Encroachment Fees • Contribution for water supply connections • Building permission Fee • Layout Charges • Leases from Tanks and lakes • User Charges Taxes • Property Tax • Advertisement Tax • Vacant Land Tax – 0.5%/0.2% • Profession Tax Municipality – 95% Collection Commercial Tax Dept – 5% • Entertainment Tax Municipality – 90% Film Chambers – 7% Collection Charges to commercial – 3% • Transfer duty on property Municipality – 95% Collection Dept.(Registration Dept)– 5%

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

6. Property Tax • Zoning based on location 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 • RCC Posh • 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

7. 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

8. Property Tax …. Contd… • Allowances Age of the buildingAllowances 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 )

9. Property Tax … Contd… 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 - 0.5% of Capital Value - Mpltys/N.Ps - 0.2% of Capital Value • Advertisement Tax - Hordings - Uni poles - Lolly Pops etc.,

10. 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.

11. 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

12. 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 KranthiPadham (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 AwasYojana

13. 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

14. Improvement of Revenue Resources Ensure Assessment of all buildings as per norms Identification of Un-assessed and under assessed and 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.

15. Municipal Budget

16. Budget Calendar for Municipalities ActivityNot 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

17. Budget Calendar for Corporations ActivityNot 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 Corporators15th December Approved by the Corporators20th February Submission to Government 01st March

18. Rs.in crores Income & Expenditure 2009-10 to 2013-14

19. Rs.in crores Property Tax Collection-2009-10 to 2013-14

20. Nandyala Yemmignur Machilipatnam Nidadavole Rajampeta Kakinada Gajuwaka etc., Worst Practices

21. Thank you