In addition to tax revenues, Urban Local Governments (ULGs) in India can also generate non-tax revenue through various means. Non-tax revenue refers to revenue that is generated from sources other than taxes.
A further source of urban local governments income comes from non-tax revenues. These are mainly derived from fees levied in markets, bus stands, cart stands, slaughter houses, and rents from Municipal property such as land and buildings (especially shopping centers) income from public utilities and interest on investments. Apart from taxes and rates there are some sources of revenue such as fines, fees, penalties, rents and income from other minor sources. Income from all these sources is generally not substantial.
Here are some of the major sources of non-tax revenue for ULGs in India:
- Fees and charges: ULGs can levy fees and charges for various services such as building plan approvals, issuing certificates, and other licenses. These fees and charges are usually fixed by the ULG and can be revised from time to time.
- Rents and leases: ULGs can generate revenue by leasing out their properties, such as community halls, markets, and shops, to private parties. The revenue generated from rents and leases can be a significant source of income for ULGs.
- Sale of property and assets: ULGs can generate revenue by selling their assets such as land, buildings, and vehicles. However, such sales need to be done in a transparent and accountable manner.
- Grants and subsidies: ULGs can receive grants and subsidies from the central and state governments for various development projects. These grants and subsidies can help ULGs to undertake infrastructure development projects and provide better services to citizens.
- Loans and borrowings: ULGs can also generate revenue by taking loans and borrowings from banks and other financial institutions. However, ULGs need to ensure that they have adequate revenue sources to repay the loans and borrowings.
1. Fees
The term fee is generally defined to be a charge for special service rendered to individuals by some government or semigovernment agency. The amount of fee levied is to bear some relationship with the expense incurred by such agency in rendering a service, though costs are uniform and no account is taken of the
varying abilities of different recipients to pay. These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all the cases.
Applying the ratio of these decisions, it has been held by the Hon’ble court that it is incontrovertible that the municipality which is rendering numerous services to the persons within its area of operation and therefore, the levy of license fee as fee by it is fully justified. The municipal committee is competent to levy the following fees.
(i) Fee for copies of register, documents maps etc.
(ii) Fee for notice of demand for payment of a tax.
(iii) Tehbazari fee
(iv) Fee for license for dangerous or offensive trades.
(v) Fee for license of the diverse of the vehicles of animal kept or plying for hire.
(vi) License fee in respect of total and lodging houses
(vii) Fee for licensing of potters, animals etc.
(viii) Fee for licensing of premises and person engaged in sale, preparation or exposure for sale of specified articles of food and drink.
(ix) Fee for registration of dogs.
(x) Fee for use of premises of slaughter of animals.
(xi) Fee for disposal of dead animals.
(xii) Fee for wasting and bathing animals.
(xiii) Fee for detention of stray dogs.
(xiv) Cattle pound fee
(xv) Fee for letting of fire works
(xvi) Fee for supply of copies of bye-laws.
(xvii) Medical Fee
(xviii) Fee from educational institution
2. Rents
Apart from fees, a substantial portion of the municipal fund is earned by way of rents received from Municipal property. This may include rents from land and buildings, marriage places, dak bungalows, rest house, serais etc.
3. Sale Of Property
The municipality may also appropriate the proceeds out of sale of its movable and immovable properties which can be sold with the prior sanction of the state Government.
4. Income from Investments
Municipality may with previous sanction of the Deputy Commissioner invest any
portion of its municipal funds in securities of the central government or invest it in such other securities or place it in such a manner as the State Government may approve in this behalf and vary such investments and place for others of like nature further provides that the income resulting from such securities and placements and the proceed of the sale of the same shall be credited to the municipal fund.
5. Fines and Penalties
Urban local governments have been authorized under the statutes to claim fine and penalties in respect of matters under its control.
Overall, non-tax revenue sources can help ULGs in India to generate additional income and fund their development projects. However, ULGs need to ensure that they use these sources of revenue in a transparent and accountable manner to benefit their citizens.
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