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Taxes Collected by Panchayat

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In India, the term Panchayat refers to a system of rural self-government. It was established in all states of India by acts of state legislatures to build democracy at the grassroots level. It was constitutionalized by the 73rd Constitution Amendment Act of 1992. The second Administrative System Reforms Commission of India (2005 – 2009) has summarized the sources of revenue for the panchayat in that internal resource generation – taxation being one of them. A Gram Panchayat may appoint a tax collector to collect tax quarterly, half-yearly, or in advance as decided by the particular Gram Panchayat. The Tax Collector shall issue receipts in the prescribed forms of all types of collections and he shall also enter all collections in the daily collection register of the Gram Panchayat. According to Article 243(H), the Panchayats have the power to levy, collect and appropriate taxes, duties, tolls, and fees by such procedure of the State Legislature and enable them to make such grants in aid to the Panchayats from the consolidated fund of the state.

What is a Panchayat?

A Panchayat is a village-level institution in India that has been vested with the authority to impose taxes. It consist of a group of five or more elected representatives, who are responsible for the governance of the village. The Panchayat is empowered to collect taxes on land and property, as well as on professional and commercial activities within the village.

What is the Purpose of a Panchayat?

A Panchayat is an elected governing body that is responsible for administering a village or small town in India. The Panchayat system was introduced by the British during their rule in India as a way to provide local self-government to rural areas. The purpose of a Panchayat is to provide basic services and amenities to villagers, such as water, sanitation, roads, and primary health care. The Panchayat also imposes taxes on villagers to raise funds for these services.

Who Imposes Taxes on a Panchayat?

The Panchayat is the local self-government body in India. It imposes taxes on properties and trades within its jurisdiction. The tax revenue collected by the Panchayat is used for the development and maintenance of the village.

How are Taxes Collected by a Panchayat?

In India, a Panchayat is a local government body that imposition and collects taxes from the people living within its jurisdiction. There are different types of taxes imposed by Panchayats, which include property tax, professional tax, water tax, and sewerage tax. Property tax is imposed on the value of land and buildings owned by individuals and businesses. Professional tax is levied on those engaged in certain professions such as engineering, architecture, medicine, etc. Water tax is levied on the consumption of water used for domestic or commercial purposes. Sewerage tax is imposed on the use of sewerage facilities provided by the Panchayat.

Different Kinds of Taxes:

Each Panchayat may also levy taxes fixed by the Gram Panchayat with the prior approval of the Government within its jurisdiction. Any resolution of the Gram Panchayat canceling an existing tax or reducing the rate of taxation shall not be enforced without the previous approval of the Commissioner.

House Tax:

A house tax is levied on all houses in the village on either the annual rental value or the capital value. It shall be levied at such rates as may be fixed by Gram Panchayat not being less than the minimum rates and not exceeding maximum rates prescribed regarding the basis of levy adopted by the gram panchayat. the house tax will be levied every year and shall be paid by the owner within thirty days of the commencement of the year.

The following classes of the house shall be exempt from the House tax :

  • Building set apart for public worship.
  • Choultries for the occupation of which no rent is charged
  • Buildings are used for educational and hostel purposes.
  • public libraries and public buildings.
  • ancient monuments protected under the Ancient Monuments Preservation Act,1904
  • Charitable hospitals and dispensaries and other buildings 

Advertisement Tax:

Everyone who erects, displays, fixes, or maintains any land building, wall hoarding, or structure advertising is liable to tax. Who displays any advertisement to public view in any manner whatever in any place whether public or private shall pay on every advertisement. Such rate of tax shall be subject to the maximum and minimum prescribed by the Government on this behalf. Any exemption from advertisement tax may be decided by the Gram Panchayat with the approval of the Zilla Parishad by resolution.

No tax shall be levied under this section on any advertisement or notice :

  • of a public meeting
  • Of election to any Legislative Assembly or Gram Panchayat or Mandal Parishad or Zilla Parishad.
  • Any advertisement that is not in the sky sign is exhibited within the window of any building.
  • Any sale or entertainment or meeting held on the same land or building relating to trade or business carried on within the land or building.
  • Relates to the Business of any railway administration.

Vehicle Tax:

It will be levied every year on all vehicles kept or used within the village at such rates as may be fixed by the gram panchayat not being less than the minimum rates and not exceeding the maximum rates prescribed. Vehicle means a conveyance suitable for use on roads or railways which includes carriage, cart, wagon, wheelbarrow, truck, or Rickshaw but does not include a motor vehicle.

Latrine Tax:

Toilet or maintenance tax payable by the occupier or Owner of buildings about private toilets or premises Compounds cleaned by Panchayat.

Water Tax:

The tax depends upon Where the supply of drinking water by Panchayat is determined according to the cost of supply and maintenance of Water supply schemes. And the tax may vary depending on the diameter of the pipe that supplies water to households. There is a separate water tax levied by the Gram Panchayat for the supply of water for the construction of new houses and buildings. Gram Panchayat may collect certain taxes for the supply of water from tanks and wells for the following purposes :

  • Making of bricks and tiles.
  • Washing of clothes by washer man.
  • For industrial or commercial use.
  • For purpose of irrigation.

Lighting Tax:

A lighting tax is levied for public streets, spaces, public latrines, or the like Buildings that undertake such lighting arrangements have been made by the Gram Panchayats.

Drainage Tax:

It is paid by the owner of the land and buildings where is the drainage system Organized in Panchayat. Drainage tax includes cleaning of drains and maintenance of drains. Gram Panchayat may collect tax on the collection of garbage by vehicles around streets and houses in a particular Panchayat.

Tax on Fairs and Festivals:

Gram Panchayat tax can be levied on annual fairs and festivals held within the boundaries of the Gram Panchayat. The total charge of tax is decided by passing a resolution in the gram sabha. Gram panchayat may also collect tax from shops and business persons participating in annual fairs and festivals. A gram panchayat may also levy a tax for granting permission to celebrate in a public street or place during a festival or celebration.

Market Tax:

Tax on the private markets and cart stands should be charged by Gram Panchayat. And also Gram Panchayat tax can be collected in the following cases where private market business transactions are taking place, They are slaughterhouses, hospitals, nursing homes, clinics, factories, warehouses, godowns, goods transport depots, eating houses, lodging houses, hotels, theaters, cinema houses and places of public entertainment and for other non-residential purposes.

Tax collection at Cart Stands and Tonga Stands:

Gram panchayat can collect tax every 24 hours at cart stands and tonga stands for keeping these transport vehicles like carts, tonga, rickshaws, and taxis at cart stands or tonga stands.

Tax on Sale of Animals:

A tax is levied by the Gram Panchayat on animals like Goats, Sheep, Horse, Donkey, Mule, Camel or Pony, Other Cattle brought to be sold or sold in the public market within the limits of the Gram Panchayat.

Tax on Dealers:

Gram Panchayat may collect tax from dealers temporarily occupying open grounds and structures for buildings owned or maintained by Gram Panchayat.

Tax on Broker License:

The GP may charge tax on the license which owns by brokers, commission agents, and weight man practicing their business within the Gram Panchayat

Miscellaneous Taxes:

  • Tax on new items like installation and operation of telecommunication towers.
  • Tax on building or tent situated within the panchayat which covers an area of five hundred feet or more shall be used by any party for public resort or entertainment.
  • Tax on procurement and regulation of trade of MFPs (Minor Forest Produce).
  • Tax on river quarry sites for sand and mountain quarry sites for stones which both are used for construction purposes.
  • Taxes on entry or exit of passengers, pilgrims, goods and services.

Frequently Asked Questions on Panchayat Taxation System:

Q1. Explain in brief about Taxation in Panchayat.

Ans: The second Administrative System Reforms Commission of India (2005 – 2009) has summarized the sources of revenue for the panchayat in that internal resource generation – taxation being one of them. A Gram Panchayat may appoint a tax collector to collect tax quarterly, half-yearly, or in advance as decided by the particular Gram Panchayat. The Tax Collector shall issue receipts in the prescribed forms of all types of collections and he shall also enter all collections in the daily collection register of the Gram Panchayat.

Q2. Which of the Article in the Constitution of India mentions a Panchayat Taxation System?

Ans: According to Article 243(H), the Panchayats have the power to levy, collect and appropriate taxes, duties, tolls, and fees by the such procedure of the State Legislature and enable them to make such grants in aid to the Panchayats from the consolidated fund of the state.

Q3. What exemptions are available for advertisement tax in Panchayat?

Ans: No tax shall be levied under this section on any advertisement or notice :

  • of a public meeting
  • Of election to any Legislative Assembly or Gram Panchayat or Mandal Parishad or Zilla Parishad.
  • Any advertisement that is not in the sky sign is exhibited within the window of any building.
  • Any sale or entertainment or meeting held on the same land or building relating to trade or business carried on within the land or building.
  • Relates to the Business of any railway administration.

Q4. Explain in brief about House Tax levied by Panchayat.

Ans: A house tax is levied on all houses in the village on either the annual rental value or the capital value. It shall be levied at such rates as may be fixed by Gram Panchayat not being less than the minimum rates and not exceeding maximum rates prescribed regarding the basis of levy adopted by the gram panchayat. the house tax will be levied every year and shall be paid by the owner within thirty days of the commencement of the year.

Q5. Explain in brief about the Water Tax levied by Panchayat.

Ans: The tax depends upon Where the supply of drinking water by Panchayat is determined according to the cost of supply and maintenance of Water supply schemes. And the tax may vary depending on the diameter of the pipe that supplies water to households. There is a separate water tax levied by the Gram Panchayat for the supply of water for the construction of new houses and buildings. Gram Panchayat may collect certain taxes for the supply of water from tanks and wells for the following purposes :

  • Making of bricks and tiles.
  • Washing of clothes by washer man.
  • For industrial or commercial use.
  • For purpose of irrigation.


Last Updated : 29 Nov, 2022
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