Financial Reforms – Preliminary Initiative Review of the municipal finances By Urban Reforms Cell.

Financial Reforms – Preliminary Initiative

Review of the municipal finances

By Urban Reforms Cell

18%

10%

50%

15%

8%

Population Demographic Change Income DistanceAreaForest Cover

Criteria and Weights

shows the criteria and weights assigned for inter-se determination of theshares of taxes to the States. State-specific share of taxes is presented in

Criteria Weight (per cent) – funds sharing

Source : 14th Finance Commission Report – Govt. of India

Inter-state - Share of States in percent & share of states in service tax – 14th finance commission

Share of States Other than Jammu & Kashmir in Service Tax (Per cent)

Inter-se Share of States (per cent)


4%1%

3%

10%

3%0%

3%

1%

1%2%

3%

5%

3%

8%

6%

1%1%0%0%

5%

2%

5%0%

4%

2%1%

18%

1% 7%

Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh GoaGujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Odisha Punjab Rajasthan Sikkim Tamil Nadu TelanganaTripuraUttar Pradesh Uttarakhand West Bengal

Inter-state - Share of States – 14th finance commission – fund sharing of 42% of taxes


Grants to local bodies – Weights assigned


Grants to local bodies – Basic grants


Grants to local bodies – Performance grants

Key : state have develop an eligibility criteria, have audited annual reports for two years priorTo getting the performance grant, increase in own revenues in the preceding year, have service levelBenchmarks.


As per the 14th financial commission it proposes that the new performance grants to address the following issues: (i) making available reliable data on local bodies' receipt and expenditure through auditedaccounts; and (ii) improvement in own revenues. In addition, the urban local bodies willhave to measure and publish service level benchmarks for basic services.

These performance grants will be disbursed from the second year of the award period, that is, 2016-17 onwards, so as to enable sufficient time to State Governments and the local bodies to put in place a scheme and mechanism for implementation.

Grants to local bodies – Performance grants – 14th financial commission

The details of the performance grants are given in as follows : 1. For the disbursal of the performance grant to urban local bodies would have to be

designed by the State Government concerned, subject to certain eligibility criteria. To be eligible, the urban local body will have to submit audited annual accounts that relate to a year not earlier than two years preceding the year in which it seeks to claim the performance grant.

2. It will also have to show an increase in own revenues over the preceding year, as reflected in these audited accounts.

3. In addition, it must publish the service level benchmarks relating to basic urban services each year for the period of the award and make it publically available.

4. The service level benchmarks of the Ministry of Urban Development may be used for this purpose.


The details of the performance grants are given in as follows :

5. The improvement in revenues will be determined on the basis of these auditedaccounts and on no other basis. For computing the increase in own revenues in a particular year, the proceeds from octroi and entry tax must be excluded.

6. In case some amount of the performance grant remains after disbursement to the eligible urban local bodies, the undisbursed amount should be distributed on an equitable basis among all the eligible urban local bodies that had fulfilled the conditions for getting the performance grant.

7. These guidelines for the disbursement of the rural and urban performance grantswill remain in force for the period of our award.

8. Finally, the 14th financial commission recommends that the Union Government accept the detailed procedure prepared by the State which incorporates its broad guidelines without imposing any further conditions.


30%

10%

7%8%

11%

4%

6%

3%

8%

2%2%

2%

1%1% 1% 1%0% 1% 0% 0% 0% 0% 0% 0% 0% 0%Property TaxState Finance Commission GrantsSurcharge and Stamp DutyGovernment GrantsWater TaxBuilding permission feeBRGFOthers13th Finance Commission GrantsWater Tap feeRentsLibrary CessEntertainment TaxAuction feeMutationsD & O TradesPer Capita GrantsMLA LADSAdvertisement TaxProfession TaxVacant Land TaxCertificate feeCable TV feeMP LADSCattle Pond feeScenarage Tax

Actual demand in ULBs of Telangana excluding GHMC is (Rs.) 700.07 crore in the previous year

Data Source :http://cdma.telangana.gov.in/coir/CodeEntry.aspxhttp://cdma.telangana.gov.in/MWMPMP/ULB_Proforma4.aspxWith specific individualized queriesAnalysis by URC

http://cdma.telangana.gov.in/coir/CodeEntry.aspx


http://cdma.telangana.gov.in/MWMPMP/ULB_Proforma4.aspx

Actual amount collected in ULBs of Telangana excluding GHMC is (Rs.) 570.07 crore in the previous year

28%

13%

11%

10%

8%

6%

6%

5%

2%

2%2%

1%1%1% 1%1% 1%0% 0% 0% 0% 0% 0%0% 0% 0%

Property TaxState Finance Commission GrantsSurcharge and Stamp DutyGovernment GrantsWater TaxBuilding permission feeBRGFOthers13th Finance Commission GrantsWater Tap feeRentsLibrary CessEntertainment TaxAuction feeMutationsD & O TradesPer Capita GrantsMLA LADSAdvertisement TaxProfession TaxVacant Land TaxCertificate feeCable TV feeMP LADSCattle Pond feeScenarage Tax





Total

Propert

y Tax

State

Finan

ce Commiss

ion Grants

Surch

arge a

nd Stam

p Duty

Govern

ment G

rants

Wate

r Tax

Building p

ermiss

ion feeBRGF

Others

13th Finan

ce Commiss

ion Grants

Wate

r Tap

feeRen

ts

Librar

y Cess

Enter

tainmen

t Tax

Auction fe

e

Mutations

D &am

p; O Tr

ades

Per Cap

ita Gran

ts

MLA LA

DS

Adverti

semen

t Tax

Profes

sion Ta

x

Vacant L

and Ta

x

Certificat

e fee

Cable

TV fe

e

MP LADS

Cattle

Pond fee

Scenara

ge Ta

x0

10000

20000

30000

40000

50000

60000

70000

80000

57707

1693482636994640148983564349129271032941925887881532509359342298272250221182101 95 32 15

Actual demand (Rs.)Amount collected previous year (Rs.)

Actual demand vs collected in ULBs of Telangana exlcluding GHMC in the previous year





20919.2036; 24% 10939.42

; 13%

343.325; 0%

551.105; 1%

4501.728; 5%

3612.767; 4%173.94; 0%34.4; 0% 216.692; 0%674.1094; 1%916.08; 1%9338.82; 11%1196.733406; 1%

753; 1%

594; 1%

761.83599999999

9; 1%

3897.2517; 4%

381.5; 0%

213.16; 0%

1337.72428; 2%

307.2; 0%

7537.99; 9%

7874.5641200000

1; 9%

317.8237; 0%

1520.35; 2% 8347.24605; 10% Property Tax 13th Finance Commission Grants

Advertisement Tax Auction feeBRGF Building permission feeCable TV fee Cattle Pond feeCertificate fee D & O TradesEntertainment Tax Government GrantsLibrary Cess MLA LADSMP LADS MutationsOthers Per Capita GrantsProfession Tax RentsScenarage Tax State Finance Commission GrantsSurcharge and Stamp Duty Vacant Land TaxWater Tap fee Water Tax

Target proposed in the current year (2014-15) Telangana excluding GHMC





68%

32%

Own taxesGrants

Own taxes vs Grant (2013-14) in ULBs of Telangana





Specific Initiatives targeted by CED in the days ahead

•Professional tax•Advertising revenues•Property tax collection – with forensic fraud•Water tax

Financial Reforms – Preliminary Initiative Review of the municipal finances By Urban Reforms Cell.

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Transcript of Financial Reforms – Preliminary Initiative Review of the municipal finances By Urban Reforms Cell.