Article 243H of CoI : Article 243H: Powers to impose taxes by, and Funds of, the Panchayats.

Explanation using Example

Example 1:

Scenario: A village Panchayat in Maharashtra wants to improve the local infrastructure by constructing new roads and maintaining existing ones.

Application of Article 243H:

• Clause (a): The Maharashtra State Legislature passes a law authorizing the village Panchayat to levy a small road maintenance tax on all households in the village. The Panchayat collects this tax and uses the funds specifically for road construction and maintenance.
• Clause (b): The State Government assigns a portion of the vehicle registration fees collected in the district to the village Panchayat. This additional revenue helps the Panchayat fund larger infrastructure projects.
• Clause (c): The State Government provides a grant-in-aid from the Consolidated Fund of Maharashtra to the village Panchayat to support its road maintenance projects.
• Clause (d): The Panchayat sets up a dedicated Road Maintenance Fund where all the collected taxes, assigned fees, and grants are deposited. The Panchayat can withdraw money from this fund as needed for road-related expenses.

Example 2:

Scenario: A Panchayat in Kerala wants to improve the local water supply system to ensure clean drinking water for all residents.

Application of Article 243H:

• Clause (a): The Kerala State Legislature enacts a law allowing the Panchayat to levy a water usage fee on all households and businesses. The Panchayat collects this fee to fund the maintenance and expansion of the water supply system.
• Clause (b): The State Government assigns a portion of the water tax collected at the state level to the Panchayat. This helps the Panchayat cover the costs of upgrading the water infrastructure.
• Clause (c): The State Government provides a grant-in-aid from the Consolidated Fund of Kerala to the Panchayat to support its water supply improvement projects.
• Clause (d): The Panchayat establishes a Water Supply Fund where all collected fees, assigned taxes, and grants are deposited. The Panchayat can withdraw money from this fund to pay for water supply system improvements and maintenance.

Example 3:

Scenario: A Panchayat in Tamil Nadu wants to organize a local fair to promote tourism and local businesses.

Application of Article 243H:

• Clause (a): The Tamil Nadu State Legislature authorizes the Panchayat to levy a small entry fee for the fair. The Panchayat collects this fee to cover the costs of organizing the event.
• Clause (b): The State Government assigns a portion of the entertainment tax collected in the district to the Panchayat. This additional revenue helps the Panchayat fund the fair and other cultural events.
• Clause (c): The State Government provides a grant-in-aid from the Consolidated Fund of Tamil Nadu to the Panchayat to support the fair and promote local tourism.
• Clause (d): The Panchayat creates a Fair and Tourism Fund where all collected fees, assigned taxes, and grants are deposited. The Panchayat can withdraw money from this fund to pay for the fair and other tourism-related activities.