Operationalising The 13 Finance Commission Recommendations: A Compendium of Legislations & Practices

NIUA
National Institute of Urban Affairs
Ministry of Urban Development

Government of India
Administrative Staff College of India
Operationalising the
13th Finance Commission Recommendations
(Urban Local Bodies)
A Compendium of Legislations & Practices
Under the Aegis of
Ministry of Urban Development, Govt. of India

Prepared by

With support from
National Institute of Urban Affairs

July, 2010
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13 FC- Operationalising the Recommendations - ULBs
Operationalising the
13th Finance Commission Recommendations
(Urban Local Bodies)
A Compendium of Legislations & Practices
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Contents
1.
Introduction
2.
Supplement to Budget on Local Bodies
11
3.
Audit System in Local Bodies
13
4.
Independent Local Body Ombudsmen
19
5.
Electronic Transfer of Grants
29
6.
Prescription of Qualifications to SFC members
30
7.
Levy of Property Tax without Hindrance
35
8.
State Property Tax Board
37
9.
Standardised Service Level Benchmarks
48
10.
Fire-hazard Response and Mitigation Plan
51
11.
General Recommendations
52
12.
Way Forward
53
Annexures
56
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1. Introduction
The recommendations of the Thirteenth Finance Commission are of far reaching
significance for strengthening local governance in India. The Commission initiated a process
to reform and vitalise the self-governing institutions to enable them to play the role the
constitution has envisaged through the Seventy Third and Seventy Fourth Constitution
Amendment Acts. The Commissions recommendations will strengthen and take forward
the urban governance reform agenda launched by the Government of India under
Jawaharlal Nehru National Urban Renewal Mission (JnNURM) in 2005. The Thirteenth
Finance Commission (13th FC) attempted to strengthen the finances of urban local bodies
(ULBs) in the broader context of strengthening urban governance.
The Finance Commissions, constituted by the President of India every five years,
began to consider measures to augment the Consolidated Fund of States to supplement the
resources of the panchayats and municipalities only after passage of the 73rd and 74th
Constitution Amendment Acts in 1992. But as the Tenth Finance Commission was
constituted before the implementation of the two Constitution Amendment Acts, the
Commissions Terms of Reference did not include the consideration of the needs of the local
bodies. There are specific references to the local bodies in the Terms of Reference of the
subsequent Finance Commissions. The previous three Commissions made several
recommendations to improve finances and governance of local bodies. Making a departure,
the 13th FC made implementation of some its recommendations conditional to access part
of the funds it recommended to the local bodies.
The 13th FC inter alia reviewed the framework and recommendations of the previous
Commissions; considered the views of the Ministry of Urban Development, Planning
Commission and the state governments and held consultations with state and local
governments. It sent out an exhaustive questionnaire seeking responses from state
governments and others on organisation on the working of state finance commissions
(SFCs), finances of ULBs, accounting and audit practices, implementation status of
recommendations of the earlier Finance Commissions, etc. The data enabled the
Commission to assess the performance of the ULBs, their finances, status on service
delivery, governance, etc. The state governments submitted memorandums indicating their
special needs and requesting the Commission to significantly increase support to the local
bodies. The Commission undertook a review of the reports of the Second Administration
Reforms Commission, National Commission to Review the Working of the Constitution and
the Eleventh Five Year Plan of the Government of India. The Commission sponsored studies
and seminars including a study on best practices on aspects of financial management of
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ULBs in the country. Finally, it undertook extensive consultations with state and local
governments through visits to states.
The 13th FC referred to the growing urban population, shrinking fiscal space,
increasing expenditure of ULBs, below normal civic service delivery, dismal state of fire
services, delays in transfer of Finance Commission grants to local bodies, etc. The
Commission also Commission referred to the lack of maintenance of accounts by the local
bodies and their slack attitude to get their accounts audited and felt that it reflects on the
non-performance by state governments.
A major problem experienced by the 13th FC is that the data provided by the states is
not reliable. The Commission was not happy with the organization and working of the SFCs;
as was the case with the previous Finance Commissions. It found the quality of their reports
patchy and divergence in analysis, scope and scale of their recommendations. It clearly
noted that there are serious limitations in the use of SFC data as well as recommendations.
It found that that there is little incentive to SFCs to produce comprehensive reports due to
poor ownership by the state governments.
Unexploited Property Tax Potential
The 13th FC estimated wide variations in the property tax levy and collection
between cities. The highest per capita property tax collection in 2006-07 was Rs. 1,334 in
Mumbai, the lowest was Rs. 25 in Patna, and the average works out to Rs.486. The ULBs
have not been able to exploit the property tax potential fully. The Commission noted that
on a conservative estimate, by improving coverage and collection, urban property tax can
yield a sum anywhere between Rs. 21,877 crores to Rs. 32,864 crores annually. It further
noted that much more is possible by effecting improvements in valuation and rate structure.
The 13th FC felt that finances alone will not improve service delivery unless the
governance is improved. Based on this principle, it addressed the aspects relevant to ULBs
viz., devolution index; quantum of divisible pool to be shared; delays in fund transfer to local
bodies by the state governments; compliance to the conditions stipulated by the previous
commissions; maintenance of accounts by the ULBs; audit and accountability; SFCs
synchronicity, quality of reports, implementation of recommendations; role of urban
development authorities; etc. The Commission felt that the organisation and working of the
SFCs is not satisfactory and there is much to be desired. The Commission was conscious of
the fact that several recommendations of the earlier finance commissions were not
implemented in full both by the state governments and ULBs. Failure to develop an
adequate and authentic database on different aspects of their working including finances,
accounts and audit is a case in point. Similarly, it came to the conclusion that the ULBs are
not exploiting the property tax potential fully and have been looking for external support.
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Keeping these factors in mind, the 13th FC wanted to bring discipline as well as commitment
both on the part of state governments and local bodies to improve urban governance.
The 13th FC substantially increased the share of the local bodies - both urban and
rural. It allocated Rs. 87,519 crores; a quantum leap from the Twelfth Finance Commissions
Rs.25,000 crores. During the same period, the grants to ULBs increased substantially from
Rs.5,000 crores to Rs. 23,111 crores.
Two Components of the Grant
The 13th FC divided grants to the local bodies into two components general basic
grant and general performance grant. The basic grant can be accessed by all states as per
the criteria laid down by the Commission. But the performance grant can be accessed only
by those states which comply with the conditions it stipulated. Drawing from the poor
implementation of the recommendations of the previous finance commissions, the 13th FC
made it mandatory for compliance to nine conditions to access performance grant. If the
states do not comply with the conditions they will forfeit the grant for that year. The states
are given one year i.e., 2010-11 during which all the states should initiate and complete the
legislative process and to put in place institutional arrangements to comply with the
conditions. Grant will be available only from the year 2011-12. The states are entitled to
performance grant only prospectively after complying with the conditions and not
retrospectively.
Conscious of the needs of the Special Areas the 13th FC made an allocation of Rs.1,
357 crores for these states based on population. This grant also is divided into two
components Special Areas Basic Grant and Special Areas Performance Grant. The
conditions applicable to access the general performance grant are applicable to the Special
Areas Performance Grant as well.
Conditions
There is a qualitative difference in the conditions laid down by the 13th FC and the
previous Commissions. The conditions of the previous Commissions are recommendatory.
No mechanisms were put in place to verify compliance to the conditions. Discussing about
the accounting systems in local bodies, the Commission noted that the exhortations of the
previous Commissions were seen more as indicative rather than as imperative and the state
governments were either unable or unwilling to implement them. It concluded that
incentive based approach would work better than exhortation based approach. Based on
this premise, the 13th FC made it mandatory to comply with the nine conditions for
accessing the performance grant. These conditions aim at incentivizing the performing
states, empower the local bodies and attempt to put in place a credible local governance
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framework. They also aim to make local bodies responsible for service delivery, augment
accountability to public and expected to result in better outputs and outcomes. The nine
conditions stipulated by 13th FC can be considered as reforms to improve the financial status
of the ULBs as well as governance.
Conditions or Reform Agenda
The 13th FC stipulated the following nine conditions to be complied with by the local
bodies before they can access the performance grants recommended by it:
Firstly, introduction of a supplement to budget documents on ULBs;
Secondly, putting in place audit system in all local bodies;
Thirdly, establishment of an independent Local Body Ombudsmen System;
fourthly, electronic transfer of grants to ULBs in 5 days;
Fifthly, prescribing qualifications to SFC members through an Act;
Sixthly, empowering the ULBs to levy property tax without hindrance;
Seventhly, constitution of State Property Tax Board;
Eighthly, putting in place benchmarks for delivery of essential civic services; and
ninthly and lastly, putting in place Fire-hazard Response and Mitigation Plan.
The mechanism stipulated by the Commission to ensure compliance to the
conditions is given in Table 1.1.
Forfeiture of Grants
The states failing to comply with the conditions discussed earlier would forfeit the
performance grant for that year and the forfeited amount will be distributed among the
states complying with the conditions. The Commission also recommended the process for
the distribution of the grant forfeited as given below:
50% of amount forfeited by the ULBs to be distributed among all states irrespective
of their compliance with the conditions.
Remaining 50% should be distributed among the states which have complied with
the conditions.
The Commission recommended similar procedure for the distribution of the
forfeited Special Areas Performance Grant among the states. If no state is eligible to access
the performance grant and total amount is forfeited, the amount will not be disbursed to
anyone and it would be a total loss to the ULBs. This stipulation is probably aimed at
incentivising the state governments to take the recommendations seriously and to comply
with them.
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Table 1.1. Conditionality and Compliance Mechanism

Compliance Mechanism
Reform Recommended
1. State government must put in place a
supplement to the budget documents for
local bodies separately for PRIs and ULBs.
2.The C&AG must be given TG&S over the
audit of all the local bodies in a state at
every tier/category and his Annual
Technical Inspection Report as well as the
Annual Report of the Director of Local Fund
Audit must be placed before the state
legislature
3. The state government must put in place a
system of independent local body
Ombudsman.
system to electronically transfer local body
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grants provided by the 13 FC to the
respective local bodies within five days of
their receipt from the central government.
5. The state government must prescribe
through an Act the qualifications of persons
eligible for appointment as members of the
SFC consistent with Article 243 I (2) of the
constitution.
6. All local bodies must be fully enabled to
levy property tax (including tax for all types
of residential and commercial properties)
and any hindrance in this regard must be
removed.
7.State government must put in place a
state level Property Tax Board
8. State government must gradually put in

place standards for delivery of essential
services provided by local bodies.
9. All municipal corporations with a
population of more than 1 million (2001
Census) must put in place a fire hazard
response and mitigation plan for their
respective jurisdictions.
1. Submission of relevant supplement to the budget

document
2. Certification that accounting systems as per NMAM have
been introduced in all urban local bodies
1. Certification from C&AG that TG&S was given to C&AG,
CA&Gs Annual Technical Inspection Report and Annual
Report of the Director of Local Fund Audit were placed before
the Legislature
1. Passage of legislation on Local Body Ombudsman and its

notification
2. Certification by the state government relating to transfer of
functionaries from Lok Ayukta to the Local Body Ombudsman
1. Certification by the state government along with a
description of arrangements put in place for electronic
transfer of grants to local bodies
1. Passage of legislation on qualification of persons eligible for
appointment as members of SFC
1. Certification by the state government that the hindrances

to levy property tax by local bodies have been removed.
1. Passage of legislation or issue of instructions for the

creation of Property Tax Board.
2. Publication of work plan by the Board in State Government
Gazette
1. Publication of benchmarks and targets proposed to be
achieved by the end of succeeding fiscal year by urban local
bodies in State Government Gazette
1. Publication of respective hazard response and mitigation
plans in State Government Gazette.
The 13th FC also made several recommendations to strengthen the urban governance
though their compliance is not a condition to access either the basic or the performance grant.
These recommendations mostly relate to augmentation of ULB finances. They include:
The ULBs should exploit the scope that exists in property tax and profession tax;
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The ULBs should recover at least the operation and maintenance costs of the
services they render. This is one of the mandatory reforms under JnNURM. But
unfortunately, the states have not done enough to ensure that this mandatory
requirement is complied with even in the Mission cities;
Levy of user charges on roads if construction of any road in the city leads to tangible
commercial benefit;
ULBs should access market based financing of infrastructure and desired that Pooled
Financing Model should be fully exploited;
Urban Development Authorities should share a percentage of their income including
income from sale or lease of land with ULBs;
The ULBs should be enabled to levy and collect user charges from the central
properties.
State governments should share a portion of mining royalties with ULBs;
The states should incentivise revenue collection efforts of ULBs through matching
grants;
Release of Grants recommended by the Commission in two instalments in January
and July subject to submission of utilisation certificates without any other
documentation;
Speedy implementation of JnNURM reform relating to assigning or associating ULBs
in planning and delivery functions;
The city development plans must incorporate civilian portions of the Cantonments to
facilitate integration in service delivery like water supply and other schemes and the
civil community should benefit from the schemes being implemented under JnNURM
or other projects;
A portion of 13th FC grants to ULBs may be spent on revamping fire services and the
ULBs may also extend financial support to the Fire Services Department;
Formulation of guidelines for the constitution or upgradation of nagar panchayats;
Developing and using comparable and audited data in all the ULB; and
Strengthening Local Fund Audit Department through capacity building and personnel
augmentation, etc.
The 13th FCs approach and recommendations to strengthen the resource base and
the governance of ULBs are generally welcomed as there has been a quantum increase in
the grants. The conditions stipulated should be viewed in the context of slow progress
made both in implementing the 74th CAA as well as the reforms under JnNURM. Though
the mandate of the 13th FC is to suggest methods to augment the resources of the ULBs, the
Commission attempted to ensure better local governance through performance linked
grant. Its recommendations like establishment of Local Body Ombudsmen, benchmarking
service levels, property tax reforms, strengthening local fund audit and fire services
departments, etc., would go a long way to improve urban governance. As the Commission
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observed that the conditions stipulated are prudent, process based, aim at achieving a
credible performance framework and make the local bodies responsible for service level
improvements. They will increase responsibility, enhance transparency, augment
accountability to public, and are consistent with the principle of subsidiarity.
The 13th FC
initiated a multi-faceted reform process thereby giving a much needed impetus to urban
governance improvement. Access to a portion of the grants based on performance
improvements, and their forfeiture for failure of compliance aimed at committing the states
to initiate and implement urban sector reforms which are long overdue. The
recommendations of the Commission, if taken to their logical end, will contribute to a
paradigm shift in urban governance in India.
This Compendium presents some of the practices relating to the reforms suggested
by the Commission, incorporates draft bills relating to property tax board and local body
ombudsmen, includes the extracts of the legal provisions relating to some of the
recommendations of the Commission which are under implementation - either wholly or in
part, either in urban or rural local bodies, etc., to enable the states to operationalise the
recommendations within the timeframe. The table 1.2 gives a birdseye view of the current
practices relating to the conditionalities stipulated by the 13th FC. The legislative
enactments, the current practices as well as issues relating to implementation of conditions
stipulated by the 13th FC can be accessed at the website hosted by ASCI. The weblink is
http://www.asci.org.in/13thFC-Urban/index.html
Implementation of the reforms or complying with the conditions stipulated by the
Commission, it is hoped, would improve the financial status of the local bodies, improve
delivery of essential services, strengthen the state finance commissions, enable the local
bodies to receive the 13th Finance Commission grants faster, address corruption and
maladministration in local bodies, etc. It is hoped, that the implementation of the
recommendations would contribute to a substantial improvement in urban governance.
Operationalising the recommendations made by the 13th FC, therefore, should be a priority
to the state governments and urban local bodies.
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Table 1.2 Current Practices Relating to 13th FC Conditions

Reform Recommended
legislature

Ombudsman.
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constitution.
removed.
Legislations and Practices

Kerala submits a supplement to budget on LSGIs
Most states initiated the process of introducing Double Entry
Accounting System as per NMAM
18 states entrusted TG&S to CAG. Others need to follow.
C&AG Report laid on the table of the Legislature in AP,
Karnataka (PRIs), Kerala, Tamil Nadu, Maharashtra, Rajasthan
Provision in Karnataka Panchayat Act, 1993 and Kerala
Municipality Act, 1994
LFA Report laid on the table of the legislature in West Bengal
as per PR Act
LFA Report laid on the table of the legislature in AP as per
State Audit Act
Kerala is the only state where Local Body Ombudsman was
constituted and is functional
Provision exists in Orissa Corporations Act
Tamil Nadu Once the GoI and GoTN funds are released to
CMA, they are transferred to ULBs through Electronic
Clearance System (ECS).
In TN at state level conventional system is still in operation.
Karnataka - Development funds transferred electronically on
similar lines
All states have not clearly prescribed qualifications
Some states included the disciplines to draw the members.
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12 FC suggested qualifications to be prescribed by states.
The Finance Commission (Miscellaneous Provisions) Act, 1951
provides guidance.
In some states the Acts/Rules have provisions restricting the
powers of the Councils to fix the percentage of ARV, or
restrictions on the total increase in tax as a result of revision,
exemptions outside the statues through instructions, waiver
of penalty on property tax, etc. They need to be reviewed and
removed .
West Bengal is the only state where the state Property
Valuation Board exists.
The MoUD prescribed the benchmarks relating to water
supply, sewerage, SWM, and sanitation and piloted the
process in some cities.
Some states like Andhra Pradesh, Karnataka, and Madhya
Pradesh initiated the benchmarking process in all ULBs.

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2. Supplement to Budget on Local Bodies

Condition 1 of 13th FC states that the State Government must put in place a supplement to
the budget documents for local bodies separately for PRIs and ULBs. The 13th FC
observed that none of the state governments fully complied with the instructions issued by
the CGA in 2002 and show the assistance given by the state governments to the municipal
corporations, municipalities, nagar panchayats separately under the minor heads 191, 192,
and 193 respectively in the budget and finance accounts. It also noted that a few state
governments operate a few minor heads for municipal corporations and municipalities and
some state governments club assistance to all three categories of ULBs in minor head 191.
As a result of these practices, the Commission observed, it is difficult to ascertain the end
use of the assistance given by them. Keeping these factors in mind, the Thirteenth Finance
Commission recommended:
The state governments should prepare a supplement to the state budget on the local
bodies separately for urban local bodies (ULBs) and Panchayati Raj Institutions
(PRIs).
The supplement should show the details of plan and non-plan wise
classification of transfers separately for all categories of ULBs and all tiers of
PRIs.
The supplement should provide details of funds transferred to local bodies
(ULBs and PRIs) outside governments budget.
Show spatial distribution of transfers at least up to district level.
In the Finance Accounts a separate statement should be included showing detailed
plan and non-plan wise classification of transfers separately for all categories of ULBs
and all tiers of PRIs.
The states should implement in all ULBs an accounting framework consistent with
the accounting format and codification pattern suggested in the National Municipal
Accounts Manual. This implies that all ULBs should introduce accrual based double
entry accounting system as per the National Municipal Accounts Manual which has
been agreed by all the states and are in the process of customizing and adopting the
Manual.
These reforms were also recommended earlier by previous Finance Commissions as well as
the Second Administrative Reforms Commission.
The system of submitting a supplement to the budget documents relating to local bodies
exists in Kerala. Tripura also initiated the process of submitting a supplement to budget on
local bodies from this year. The supplement can be seen in the official website of ASCI.
The Budget Provisions to LSGIs (Municipalities and Municipal Corporations) in 2010-11 for
Traditional Functions and Maintenance of Assets are given at Annexure 2.1.
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The Budget Provisions to Municipalities and Municipal Corporations in 2010-11 for

Development Expenditure are given at Annexure 2.2
Estimates of Assistance to Panchayat Raj/ Nagarapalika Institutions for 2010 -11 - Plan
Grants are given at Annexure 2.3
Estimates of Assistance to Panchayat Raj/ Nagarapalika Institutions for 2010 -11 - Non Plan
Grants are given at Annexure 2.4
Details of Distribution of Development Funds to Local Self Government Institutions districtwise in 2010-11 are given at Annexure 2. 5.
Details of Flow of Funds to Agartala Municipal Council and 15 Nagar Panchayats in Tripura
during 2010-2011 is given in Annexure 2.6.
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3. Audit System in Local Bodies

Condition 2 of the 13th FC states that the C&AG must be given TG&S over the audit of all
the local bodies in a state at every tier/category and his Annual Technical Inspection
Report as well as the Annual Report of the Director of Local Fund Audit must be placed
before the state legislature. The 13th FC observed that it could not get credible data on the
performance of local bodies. This was mainly because a majority of local bodies do not
maintain up to-date and audited accounts inhibiting a study of the local bodies. To
overcome this problem and handicap, the Commission made three related
recommendations. They are:
A) C&AG must be entrusted with TG&S for all local bodies;
B) CA&Gs Annual Technical Inspection Report should be placed before the state
legislature; and
C) The Annual Report of the Director, Local Fund Audit should be placed before the
state legislature.
The Commission suggested that these recommendations may be institutionalized, if
necessary, through legislation.
Earlier the Second Administrative Reforms Commission in its sixth report also made similar
recommendation. It suggested that the existing arrangements between the C&AG of India
and the State Governments relating to Technical Guidance and Supervision over
maintenance of accounts and audit of urban local bodies and panchayati raj institutions
should be institutionalised by making provision in the relevant state Laws. The Commission
also recommended that the audit reports on local bodies should be placed before the State
Legislature and the reports should be discussed by a separate committee of the State
Legislature on the same lines as the Public Accounts Committee. The GoM accepted these
recommendations and advised the Ministry of Urban Development to take up the state
governments and CAG. The C& AG in a letter to the honorable speakers of the state
legislatures requested them to give effect to the recommendations. The C&AGs letter along
with Office Memorandum of the Ministry of Urban Development requesting the state
governments to take necessary actions are given at Annexure 3.1.
A) C&AG must be entrusted with TG&S for all local bodies.
The 13th FC noted that in a majority of the states (Andhra Pradesh , Kerala, Tamil Nadu,
Orissa, Goa, Maharashtra, Goa, Maharashtra, Haryana, Himachal Pradesh, Jammu &
Kashmir, Uttar Pradesh, Uttarakhand, Assam, Manipur, Tripura) the C&AG conducts audit of
PRIs and ULBs under section 14 of the C&AGs (Duties, Powers and Conditions) Act, 1971
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wherever applicable. Karnataka has not entrusted the TG&S for ULBs including city
corporations but excluding the notified committees under Section 14(2) of C&AGs (DPC) Act,
1971 in May, 2010. According to the Commission the remaining states viz., Arunachal
Pradesh, Bihar, Chhattisgarh, Jammu &Kashmir, Jharkhand and Punjab have not entrusted
the TG&S for all local bodies to the C&AG. Karnataka and Tamil Nadu has not entrusted the
TG&S for gram panchayats. It is necessary that these states entrust the TG&S of all local
bodies to the C&AG.
The relevant provisions of the C&AGs (Duties, Powers and Conditions) Act, 1971 is given for
information at Annexure 3.2.
Most states entrust the TG&S to the C&AG under Sections 14 or 20. But it is desirable to
entrust under Section 19 (3) of the Act. This was done by Karnataka in case of first two
tiers of Zilla Panchayats and Town Panchayats. This will have the twin advantages of
complying with condition relating to entrusting the audit to C&AG as well placing the
consolidated report of the C&AG on the table of the state Legislature. The relevant
provision relating to Section 19(3) of the C&AGs (Duties, Powers and Conditions) Act, 1971
can be seen at Annexure 3.2.
B). CA&Gs Annual Technical Inspection Report should be placed before the state
legislature.
In six states viz., Andhra Pradesh, Karnataka, Tamil Nadu, Kerala, Rajasthan, and
Maharashtra, according to the 13th FC, C&AGs Audit Report on local bodies prepared under
Section 14/19(3) of the C&AGs (Duties, Powers and Conditions of Service) Act, 1971 are laid
before the respective state legislatures.
In Karnataka this is a statutory requirement under Section 253 of The Karnataka Panchayat
Raj Act, 1993. The relevant provisions of The Karnataka Panchayat Raj Act, 1993 are given
below for information:
253. Audit of Accounts.- (1) The Accounts of the Taluk Panchayat Fund shall be
audited by the Comptroller and Auditor General of India (hereinafter referred as
auditor) in accordance with the provisions of the Comptroller and Auditor General of
India (Duties, Powers and Conditions of Service) Act, 1971.
(2) The auditor shall, for the purpose of audit, have access to all the accounts and
other records of the Taluk Panchayat.
(3) The auditor shall send every year to the Government a consolidated audit report
in respect of the Taluk Panchayats in the state and the Government shall lay the
consolidated report before both Houses of the State Legislature.
262. Audit of Accounts.- (1) The Accounts of the Zilla Panchayat Fund shall be
audited by the Comptroller and Auditor General of India (hereinafter referred as
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auditor) in accordance with the provisions of the Comptroller and Auditor General of
India (Duties, Powers and Conditions of Service) Act, 1971.
(2) The auditor shall, for the purpose of audit, have access to all the accounts and
other records of the Zilla Panchayat
(3) The Government on receipt of the audit report of the Zilla Panchayats lay them
before both the Houses of the State Legislature.
AS noted earlier the states may entrust the audit of accounts to the C&AG under Section
19 (3) of Comptroller and Auditor General of India (Duties, Powers and Conditions of
Service) Act, 1971. This will facilitate entrustment of TG&S to the C&AG as well as placing
the consolidated audit report of the C&AG on the table of the Legislature by the
Government which is the two conditions of the 13th FC. This will obviate need to amend
the relevant municipal laws to incorporate the provisions relating to placing the
consolidated audit report of the C&AG on the table of the Legislature by the Government.
In states where the C&AG is entrusted with the TG&S, the C&AG every year prepares and
submits a report on the local bodies to the state government. In states like Andhra Pradesh,
Karnataka, Kerala, Maharashtra, Rajasthan, Tamil Nadu and West Bengal the reports are laid
on the table of the State Legislature, as noted earlier. The reports of the C&AG for different
states can be seen at http://www.cag.gov.in/html/localbodies.htm for a clear and better
understanding of the nature of the Reports.
C). Annual Report of the Director, Local Fund Audit should be placed before the state
legislature
The system of placing the Annual Report of the Director, Local Fund Audit before the state
legislature exists in states like Andhra Pradesh, Kerala and West Bengal. In Kerala and West
Bengal this is a statutory requirement, while in Andhra Pradesh State Audit Act mandates
this. The relevant provisions of the respective Acts are given below for information.
The Kerala Municipality Act, 1994
283A. Annual report regarding grants: - (1) The Chief Secretary of the State shall submit
an annual report to the Governor, immediately after the expiry of each financial year,
regarding any amount of grants to be received annually by the Municipality as per any
law or otherwise, and the actual amount given to the Municipality and the criterion
adopted by the Government for such payment.
(2) Annual report under sub-section (1) shall be laid before the Legislative Assembly,
within six months of the next financial year.
295. Accounts and Audit. (1) The Municipality shall maintain its accounts and other
books connected with the accounts in the manner and form as prescribed and shall
enter the receipt and expenditure accounts forthwith in such books.
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(3) The Examiner of Local Fund Accounts and his nominees shall be the auditors of the
Municipality.
(4) The auditors shall maintain a continuous audit of the accounts of the Municipality
and shall, after completing the audit for a year or for any shorter period or for any
transaction or series of transaction, send a report to the Municipality concerned and a
copy thereof to Government.
(5) The Auditors shall specify in the Report under sub-section (2) all cases of irregular,
illegal or improper expenditure or of failure to recover moneys or other property due to
the Municipality or any laws or waste of money, or other property thereof caused by
the neglect or misconduct of the officers or authorities of the Municipality.
(6) The auditors shall also report to Government on any other matter relating to the
accounts of the Municipality as required by the Government.
(15) An abstract of every annual report of a Municipality as certified by the auditor
showing its receipts under each head, the charges for the establishment, works
undertaken, the sum expended on each work, the balance if any, remaining
unexpended together with the audit report thereon shall be submitted to the officer
authorized by Government, in this behalf, not later than fifteenth of the second month
of the next financial year.
(16) On receipt of the report referred to in sub-section (13), the said officer shall
forthwith consolidate it and submit to the Government.
(17) The Government shall
(a) cause the accounts of the Municipality together with the audit report thereon
received by it under sub-section (16) to be laid before the Legislative Assembly; and
(b) cause the accounts of the Municipality to be published in such manner as may be
prescribed.
The West Bengal Panchayat Act, 1973
186. Audit of accounts of fund - (1) The accounts of the funds of a Gram Panchayat, a
Panchayat Samiti or a Zilla Parishad shall be examined and audited by an auditor appointed
in that behalf by the State Government at such time and place, to such extent and in such
manner as the State Government may prescribe.
(2) An auditor appointed under this secton shall be deemed to be a public servant within the
meaning of section 21 of the Indian Penal Code (45 of 1860)
187.Submission of accounts to audit. The Pradhan, the Sabhapati or the Sabhadhipati, as
the case may be, shall produce, or cause to be produced, to the auditor all such accounts of
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the fund of the Gram Panchayat, the Panchayat Samiti or the Zilla Parishad concerned as
may be required by the auditor.
188. Powers of auditors. 189. Penality. Any person who neglects or refuses to comply with the requisition made by
the auditor under section 188, within such time as may be specified, shall, on conviction by
a court, be punishable with a fine which may extend to one hundred rupees in respect of
each item included in the requisition.
190. Audit report. (1)Within two months from the date on which an audit under this Act is
completed, the auditor shall prepare a report and shall send the report to the Pradhan, the
Sabhapati or the Sabhadhipati, as the case may be of the Gram Panchayat, the Panchayat
Samiti or the Zilla Parishad and a copy thereof to the State Government.
(2)The auditor shall append to his report a statement showing(a)the grants-in-aid received by the Gram Panchayat, the Panchayat Samiti or the Zilla
Parishad and the expenditure incurred therefrom;
(b)any material impropriety or irregularity which he may observe in the expenditure or in
the recovery of the monies due to the Gram Panchayat, the Panchayat Samiti or the Zilla
Parishad or in the accounts of the Gram Panchayat, the Panchayat Samiti or the Zilla
Parishad Fund;
(c )any loss or wastage of money or other property owned by or vested in the Gram
Panchayat, the Panchayat Samiti or the Zilla Parishad.
191. Action on audit report. 191A. Laying of audit report. The audit reports of the Gram Panchayats, the Panchayat
Samitis and the Zilla Parishads along with the action taken reports for every year shall, as
soon as may be after it is received by the State Government, be laid before the State
Legislature.
Andhra Pradesh Practice
The Andhra Pradesh State Audit Act, 1989 provides for the submission of annual audit
report by the Director, LFA to the government and the grant should place the report on the
table of the Legislature. The relevant provisions are as follows:
11. (1) The Director shall submit annually a Consolidated Audit and Review Report on
the accounts of the local authorities, or other authorities in such form and in such
manner as may be prescribed and furnish the same to the Government.
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(2) The annual Consolidated Audit and Review Report in respect of local authorities
shall be laid on the table of the Legislative Assembly.
The Uttar Pradesh Audit Act, 1984 also seem to provide for placing the Audit Report of
the Director, Local Fund Accounts on the table of the State Legislature.
The states may adopt any of the methods either making a provision in the State
Audit Act or incorporating the provisions in the respective municipal laws.
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4. Independent Local Body Ombudsmen

Condition 3 of the 13th FC states that the state government must put in place a system of
independent local body Ombudsmen. The 13th FC recommended for the constitution of a
Local Body Ombudsmen to look into the complaints of corruption and maladministration
against the functionaries of local bodies both elected representatives and officials and to
recommend suitable action. This requires enactment of legislation and its notification. The
Commission also recommended in the event that all or a class of elected representatives or
officials fall under the jurisdiction of the Lok Ayukta of the state, the states may decide
whether those functionaries should be shifted to the Ombudsmen or to continue under the
jurisdiction of the Lok Ayukta.
The need and significance of establishing the institution of Ombudsman exclusively for
urban and rural local bodies was recognized much earlier both by central and state
governments. The result was the incorporation of provisions relating to Ombudsman in
model legislations. The Model Municipal Law circulated by the Ministry of Urban
Development has provision for the constitution of Ombudsman and gives details of
appointment, functions, accountability mechanisms, etc. Similarly, the Model Panchayati Raj
Bill circulated by the Ministry of Panchayati Raj has provisions relating to the constitution of
Ombudsman.
The Second Administrative Reforms Commission in its sixth report recommended for the
constitution of an independent grievance redressal mechanism viz., Local Body
Ombudsman. The Ombudsman with jurisdiction over a group of districts and large
corporations should investigate cases and submit reports relating to corruption and
maladministration in local bodies, including its elected representatives, to the Lok Ayukta,
who would forward the report with his recommendations to the Governor. This should be
done by amending the state panchayat and municipal Acts.
In India, only in Kerala the Ombudsman for Local Self Government Institutions was
constituted and is functioning. The Ombudsman is for both urban and rural local self
government institutions. The provision for the constitution of Ombudsman was made in the
Kerala Panchayat Raj Act, 1994. As per Section 271 (G) of Kerala Panchayat Raj Act, 1994,
Government of Kerala constituted the Ombudsman with effect from 29.05.2000 (S.R.O. No.
44/2000 dt. 29.05.2000). There were amendments to the provisions subsequently.
The Orissa Municipal Corporation Act, 2003, has a provision for the appointment of
Corporation Ombudsman. Aspects relating to appointment, functions, jurisdiction,
qualifications, etc., were incorporated under different sections. So far the provisions have
not been operationalised nor any one appointed as corporation ombudsman. Similar
provisions may exist in the municipal Acts of other states as well.
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Draft (State) Local Government Ombudsman Bill, 2010 is given below.

The relevant provisions of The Kerala Panchayat Raj Act, 1994 are given at Annexure 4.1.
The relevant provisions from the Specimen Municipal Law for Municipalities in India,
2002 are given at Annexure 4.2.
The relevant provisions relating to Ombudsman for Panchayats of Model Panchayat Raj
legislation are given at Annexure 4.3.
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DRAFT
THE (STATE) LOCAL GOVERNMENT OMBUDSMAN BILL, 2010
Statement of Objects and Reasons
The Thirteenth Finance Commission recommended for the setting up of an independent
Local Body Ombudsman to look into complaints of corruption and maladministration against
the functionaries of local bodies, both elected members and officials and recommend
suitable action.
The recommendation is mandatory to access the performance grants recommended by the
Commission for the local bodies by the State Government
The Bill provides for a Local Government Ombudsman for the purpose of investigating
charges of corruption or maladministration in rural and urban local government institutions
in the state of .. ..;
Whereas it is expedient to establish Local Government Ombudsman for the purpose of
investigating charges of corruption or maladministration in rural and urban local government
institutions in the state of ..;
It is hereby enacted in the sixty third year of the Republic of India, by the Legislature of
.., as follows
1.
Short title, extent and commencement

(1) This Act may be called the (State) Local Government Ombudsman Act, 2010
(2) It extends to the whole of the state of (State)
(3) It shall come into force on such date as the State Government may by
notification appoint.
2. Definitions. (1) For the purpose of this Act, (a) action means administrative action taken by way of decision, recommendation,
resolution or finding or in execution thereof or in exercise of administrative or legal
functions in any other manner and includes willful failure in taking action or omission to
act and all other expressions relating to such action shall be construed accordingly;
(b) allegation, (a) in relation to a public servant means, any affirmation that such public servant, (i) has abused his position for any gain or favour to himself or to any other
person or to cause undue harm or hardship to any other person; or
(ii) was actuated in the discharge of his functions as such public servant by
personal interest or improper or corrupt motives; or
(iii) is guilty of corruption, favouritism, nepotism or lack of integrity;
(iv) is guilty of any action as public servant which facilitates or causes to make
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any loss, waste or misapplication of money or other property of the local

government institutions.
(b) In relation to a local government institution means any affirmation that such
local government institution has defaulted or acted in excess of its powers in the
discharge of its functions imposed on it by law or in implementing the lawful
orders and directions of the Government;
(c) Complaint means a statement of allegation that a public servant or a local
government institution is guilty of corruption or maladministration and includes any
reference to an allegation in respect of which suo moto enquiry has been proposed or
recommendation for enquiry has been made by Government;
(d) Corruption includes anything publishable under Chapter X of the Indian Penal Code
(Central Act 45 of 1860) or under the Prevention of Corruption Act, 1988 (Central Act
49 1988);
(e) Maladministration means action taken or purporting to have been taken in the
exercise of administrative function in any case where, (i) such action, administrative procedure or practice governing such action is
unreasonable, unjust, oppressive, discriminatory or nepotic and will make
illegitimate gain or loss or will deny deserving benefits; or
(ii) there is willful negligence or delay in taking such action, or the administrative
procedure or method regulating such action will cause undue delay and includes
the action leading to loss or waste or misuse of fund by malfeasance or
misfeasance.
(f) Ombudsman means the Ombudsman referred to in section 3 and unless otherwise
specified the Ombudsman for purposes of this Act also includes Deputy Ombudsman ;
(g) Public Servant means an elected member of the an elected member of the local
government institutions including its President or Chairperson including its President or
Chairperson or an employee or officer under the local government institutions and
includes an employee or officer of any office or institution transferred to the local
government institutions;
(h) Secretary means the Secretary of the Ombudsman referred to in section 3;
(i) Investigating Officer means an officer authorised by the Ombudsman to conduct
investigation in respect of an allegation or complaint.
3. Appointment of Ombudsman and Deputy Ombudsman.
(1) The Governor shall, on the advice of the Chief Minister, appoint a person as
Ombudsman and, if required, such number of Deputy Ombudsman as the
government may determine.
Provided that the person appointed as Ombudsman should have held the post of a
Judge of a High Court.
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Provided that the qualifications of the Deputy Ombudsman shall be as determined

by the government in consultation with the Ombudsman.
Provided further that the Chief Minister before tendering advice to the Governor
shall consult with the Chairperson of the Legislative Council (where exists), the
Speaker of the Legislative Assembly of the State, the Leader of the Opposition in the
Legislative Council (where exists), and the Leader of Opposition in the Legislative
Assembly of the State. If there is no such Leader of opposition, a person elected in
this behalf by the Members of the Opposition in the two Houses in such manner as
Chairperson of the Legislative Council and the Speaker of the Legislative Assembly
respectively may direct;
(2) A person appointed to be the Ombudsman and Deputy Ombudsman shall, before
entering upon office, make and subscribe before the Governor an oath or affirmation
according to the form as prescribed.
(3) The Deputy Ombudsman shall be subject to the administrative control of the
Ombudsman for the purpose of convenient disposal of complaints of corruption and
maladministration under this Act. The Ombudsman may issue such general or specific
directions as may be considered necessary to Deputy Ombudsman.
Provided that nothing in this sub-section shall be construed to authorize the
Ombudsman to question any finding, conclusion or recommendation of the Deputy
Ombudsman.
4. Term of office and conditions of Service of Ombudsman and Deputy Ombudsman.
(1) Persons appointed as Ombudsman or Deputy Ombudsman shall hold office for a term of
five years from the date on which he enters upon his office:
Provided that, (a) the Ombudsman or Deputy Ombudsman may, by writing under his hand addressed
to the Governor, resign his office; and
(b) the persons appointed as Ombudsman or Deputy Ombudsman may be removed
from office in the manner provided in Section 5.
(2) The person appointed as Ombudsman shall be entitled for salary and allowances as are
admissible to a Judge of the High Court of (State).
(3) The person appointed as Deputy Ombudsman shall be entitled for salary and allowances
as prescribed by the government.
(4) On expiry of his term of office as Ombudsman, he shall not be eligible for re-appointment
as Ombudsman or for further appointment to any office of profit under the Government of
the state or in any corporation, company, society or university by or under the control of the
Government of (State).
5. Removal of Ombudsman and Deputy Ombudsman.
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(1) The Ombudsman shall not be removed from his office, except by an order of the
Governor, passed after an address by each House of the State Legislature, supported by a
majority of the total membership of the House and by a majority of not less than two-thirds
of the members of that House present and voting, has been presented to the Governor in
the same session for such removal, on the ground of proved misbehaviour or incapacity.
(2) The procedure of the presentation of an address under sub-section (1) and for the
investigation and proof of the misbehaviour or incapacity of the Ombudsman shall be as
provided in the Judges (Inquiry) Act, 1968 in relation to the removal of a Judge and
accordingly the provisions of that Act shall, mutatis mutandis, apply in relation to the
removal of the Ombudsman as they apply in relation to the removal of a Judge.
(3) The procedure for the removal of the Deputy Ombudsman shall be as prescribed.
6. Staff of the Ombudsman.-(1) The Ombudsman shall have a Secretary, and such other
officers and employees as the Government may determine in consultation with the
Ombudsman to assist the Ombudsman in the exercise of its powers and discharge of its
functions under this Act.
(2) The appointment and conditions of service of the Secretary and the employees shall be
such as may be specified by the Government.
(3) The officers and other employees referred to in sub-section (1) shall be under the
administrative and disciplinary control of the Ombudsman.
Provided that when the Ombudsman is unable to discharge his functions owing to absence,
illness or any other cause, the Deputy Ombudsman or if there are more than one Deputy
Ombudsman, the senior among them may discharge the functions of the Ombudsman under
this sub-section.
(4) Without prejudice to the provisions of sub-section (1), the Ombudsman may for the
purpose of conducting investigations under this Act utilize the services of.(a) any officer or investigating agency of the State Government; or
(b) any other agency.
(5) The Ombudsman may requisition the services of any person having experience and
expertise in any particular subject in deciding the questions before it.
7. Functions of the Ombudsman.(1) The Ombudsman shall perform all or any of the following functions, namely: (i) Investigate into any allegation contained in a complaint or on a reference from
Government, or that has come to the notice of the Ombudsman;
(ii) Enquire into any complaint in which corruption or maladministration of a public
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servant of a local government institution is alleged;

(iii) Pass an order on the allegation in the following manner, namely: (a) Where the irregularity involves a criminal offence committed by a public servant,
the mater shall be referred to the appropriate authority for investigation.
(b) Where the irregularity causes loss or inconvenience to a citizen, direct the local
government institution to give him compensation and to reimburse the loss from
the person responsible for the irregularity;
(c) Where the irregularity involves loss or waste or misuse of the fund of the local
government institution realise such loss from those who are responsible for such
irregularity, and
(d) Where the irregularity is due to omission or inaction cause to supply the
omission and to rectify the mistake.
(2) In addition to the functions enumerated in sub-section (1), the Ombudsman may pass
interim order restraining the local government institution from doing anything detrimental to
the interest of the complainant if it is satisfied that much loss or injury will be caused to the
complainant due to the alleged act.
(3) The Ombudsman may by order, impose penalty in addition to compensation if it is of
opinion that the irregularity involves corrupt practice for personal gain.
8. Powers of the Ombudsman. (1) The Ombudsman shall, for the purpose of any
investigation or enquiry under this Act, have the same powers as are vested in a Civil Court
while trying a suit under the Code of Civil Procedure, 1908 (Central Act V of 1908) in respect
of the following matters, namely: (a) summoning and enforcing the attendance of any witness and examining him;
(b) requiring the discovery and production of any document;
(c) receiving evidence on affidavits;
(d) requisitioning any public records, or copy thereof from any Court or Office;
(e) issuing commissions for the examination of witness;
(f) such other powers as are prescribed;
(2) Where the Ombudsman finds that the allegation contained in a complaint is without any
substance or trivial in nature it may by order direct the complainant to pay to the opposite
party an amount specified in the order by way of cost.
(3) Where the allegation contained in a complaint is about the loss or waste or misapplication
of the fund of the local government institution or in respect of the loss or inconvenience
caused to a citizen, the Ombudsman may, during enquiry, collect evidence, determine the
loss and direct in its order the amount to be realised from the person responsible.
(4) If the amount paid as per the order passed by the Ombudsman under sub-section (2) or
sub-section (3) is not paid within the period specified by it, the same shall be recoverable by
Revenue Recovery Proceedings as if it were an arrears of land revenue.
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9. Service of Government Departments. - The Government may, at the request of the

Ombudsman, make available the services of officers and employees of the Government
including police personnel to assist the Ombudsman in the conduct of investigation and
enquiry and in respect of such functions such Officer or employee shall be deemed to be the
officer or employee of the Ombudsman.
10. Investigation. (1) The Ombudsman may, according to the provisions of this Act, enquire into any complaint
filed before it under this Act.
(2) Notwithstanding anything contained in this Act, the Government may refer any allegation
of corruption or maladministration against a local government institution or a public servant
who is within its knowledge or brought to its notice of the Ombudsman and the Ombudsman
shall enquire into it as if it was a complaint filed under this Act.
(3) The Ombudsman may, on receipt of a complaint, conduct an investigation in the matter
and where there is prima facie case it may conduct a detailed enquiry.
(4) The Ombudsman shall not enquire into matters relating to, (a) any matter in respect of which a formal and public enquiry has been ordered by
Government;
(b) any matter in respect of which a remedy is available from the Tribunal for local
government institutions;
(c) any matter in respect of which an enquiry has been ordered under the Commission
of Inquiries Act, 1952 (Central Act 60 of 1952) or any matter pending before a court;
(d) any complaint filed after the expiry of three years from the date on which the
matter complain against have taken place:
Provided that the Ombudsman may entertain such complaint if the complainant
satisfies that he had sufficient reason for not filing the complaint within the specified
period.
11. Enquiry. (1) After an investigation if the Ombudsman is satisfied that, (a) the complaint is frivolous or vexatious or is not made in good faith; or
(b) there is no sufficient ground to initiate proceedings; or
(c) other remedies are available to the complainant and it would be more beneficial for
the complainant to avail of such remedies in view of the circumstances of the case, it
may dispose of the complaint as rejected after recording its findings stating the reason
therefore, and communicate the same to the complainant.
(2) If, the Ombudsman is of opinion that there is a prima-facie case against the person or the
local government institution complained of it shall record its findings to this effect and send
notices of the proposed enquiry to the complainant and to the opposite party.
(3) The Ombudsman shall, subject to the provisions of this Act and the rules made there
under, have power to regulate its procedures by fixing the time and place of sitting.
(4) In any proceedings before the Ombudsman, no legal practitioner will be permitted to
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represent any person, unless the Ombudsman permits, by an order, a person to be

represented by a legal practitioner for reasons to be recorded.
12. Existing cases to be transferred to Ombudsman. (1) Notwithstanding anything contained in the (State) Lok-Ayukta Act, (State) or any other
law, if any proceedings, filed and not disposed of under the said Act, before the constitution
of Ombudsman as per the provisions of this Act, relate to a public servant or local
government institution as per the provisions of this Act, all cases with regard to such
proceedings shall be transferred to the Ombudsman and the Ombudsman shall decide the
cases in accordance with the provisions of this Act.
(2) All cases, with regard to the loss, wastage and misappropriation of any land of the local
government institution, pending before the Government or any other authority and disposed
of just before the constitution of Ombudsman and the Ombudsman shall dispose of the cases
in accordance with the provisions of this Act.
(3) No complaint, against a public servant as defined in this chapter, shall be entertained by
the (State) Lok-Ayukta or Upa Lok-Ayukta constituted as per the (State) Lok Ayukta Act,
(State) on or after the date of the constitution of Ombudsman as per the provisions of this
Act.
13. Initiation of prosecution.(1) If, after an investigation or inquiry, the Ombudsman finds that there is a prima-facie case
against the accused involving a criminal offence, the Ombudsman may refer the complaint
and the findings to a competent authority with recommendation to initiate prosecution.
(2) The authority responsible, for initiating such prosecution shall conduct a detailed enquiry
if necessary and charge a case.
14. Disposal of complaints.(1) The Ombudsman may consider and dispose of complaints other than those involving
criminal offences, in the following manner, (i) award of compensation, to a citizen in case of loss or grievance;
(ii) Order the recovery of loss caused to the local government institution from the
person responsible;
(iii) Order the supply of omission or rectification of defects due to inaction;
(iv) Order the recovery of loss from the accused failing which, order realisation through
Revenue Recovery Proceedings;
(v) Order other necessary remedial measures considering the facts and circumstances
of the case.
(2) Where the Ombudsman finds that the procedure or practice regarding the administration
of local government institution gives room for complaint, it may give suggestions to the
Government or local government institution relating to the measures for avoiding the
recurrence of such complaint.
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(3) The Ombudsman shall submit an annual report regarding the performance of its functions
under this Act to the Government and the Government shall lay it before the Legislative
Assembly with an explanatory memorandum.
15. Procedures to be prescribed. The Government may make rules in respect of the following matters, namely: (i) The conditions of service of the person(s) of the Ombudsman and Ombudsmans
staff;
(ii) The form and manner of filing complaints before the Ombudsman and the manner
of filling cases either suo moto or on reference by the State Government
(iii) The manner and procedure of conducting investigation;
(iv) Procedure for moving the appropriate authority for the initiation of prosecution;
(v) Procedure to be followed during the inquiry, which as far as possible, be summary
proceedings;
(vi) The manner of implementing the order of the Ombudsman and further
proceedings;
(vii) Any other matter which the Government may deem necessary to prescribe.
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5. Electronic Transfer of Grants

Condition 4 of the 13th FC states that the state government must put in place a system to
electronically transfer local body grants provided by the 13th FC to the respective local
bodies within five days of their receipt from the central government.
The 12th Finance Commission recommended that the funds recommended by it should be
transferred to local bodies within fifteen days. Despite this recommendation, states
continue to delay transferring the funds to local bodies. This inconveniences the local bodies
to plan and implement programmes and also comes in the way of predictability of resources
by the local bodies. To overcome this problem of delay in the transfer of Finance
Commission grants to local bodies, the 13th Finance Commission recommended that the
state governments should electronically transfer to local bodies within five days of their
receipt from the central government. Only in cases where banking infrastructure is lacking
alternative channels should be put in place and funds should be transferred within ten days
after their receipt from central government.
At present the Finance Commission grants received from Government of India takes
considerable time before they reach the local bodies to whom they are meant. In the
process of transfers the departments of Finance, Municipal Administration, Treasury,
Director of Local Bodies are involved. The entire process takes anywhere between eight to
ten weeks; some time even longer.
Some states have initiated the process of electronically transferring the funds to local
bodies. For eg., in Tamil Nadu, there are three agencies involved in transfer of funds to the
local bodies viz., Finance Department, Treasurary, Commissioner of Municipal
Administration and Local Bodies. Between finance and Treasury, the process takes about 6-8
weeks and once the funds are received by the Commissioner of Municipal Administration,
they are transferred electronically to corporations and municipalities on the same day. In
Karnataka also, similar system exists in case of transferring funds received from Government
of India.
The Government of Rajasthan has initiated the process and transferred the funds received
from the Government of India under 13th Finance Commission allocations through electronic
method.
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6. Prescription of Qualifications for SFC Members

Condition 5 of the 13th FC states that the state government must prescribe through an Act
the qualifications of persons eligible for appointment as members of the SFC consistent
with Article 243 I (2) of the constitution. Constitution of State Finance Commissions by the
state governments is a constitutional requirement under Article 243 I. The Commissions are
constituted once in five years to review the financial position of the local bodies and to
recommend principles governing the distribution of finances between the states and local
bodies and measures needed to improve the financial position of the local bodies. As per
the constitutional requirement, states made the provision in the state panchayat
raj/municipal Acts for the constitution of State Finance Commissions. Most states, however,
have left it to the state governments to prescribe the details of composition, qualifications,
term, etc. The states have mostly incorporated the constitutional provisions in their Acts. In
some cases the details of the composition, working procedures and other related aspects
were also incorporated in Acts or Rules framed there under. In some cases certain
qualifications have been prescribed and others they were left open. This resulted in wide
variations between the State Finance Commissions and left much scope for variations in
their appointment, organization and working.
The 13th FC, like the previous finance commissions, expressed concern about the
appointment, organization and working SFCs, patchy nature of their reports, wide
divergence in the quality of analyses, scope and scale of their recommendations, problem of
non-synchronicity with national finance commissions in terms of coverage of period, etc. It
emphasized on the urgent need to constitute SFCs on time and synchronize the period
covered with the national Finance Commissions, implementation of the recommendations
of the SFCs without delay and to promptly place the action taken reports before the state
legislature.
The Commission observed that the recommendations of the 12th FC on the constitution of
the SFCs continue to be valid and merit attention. The Commission, while endorsing the
recommendations of the 12th FC, noted that the SFCs need to examine important issues
legal, economic, financial and administrative, as well as those relating to decentralization.
This requires that the SFC members should be well equipped to meet these challenges.
Based on this requirement, it recommended that the state governments to legislate on the
requisite qualifications of SFC members.
The earlier FCs also expressed similar concerns about their organization, working processes
as well as their reports. The 11th FC noted that they could not formulate their
recommendations based on the SFC recommendations as was expected of them by the
constitution. It noted the heterogeneity in the approach, contents as well as the period
covered by the SFCs. It observed that no time limit is prescribed either in the constitution or
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in the state legislation on the submission of ATRs to legislature on the implementation of

the SFC recommendations.
The 12th FC similarly noted about the casual manner in which SFCs are constituted, delays in
the constitution of SFCs, their constitution in phases, frequent reconstitution, qualification
of persons chosen, poor quality of SFC reports, delayed submission of reports, part
acceptance/implementation of SFC recommendations, delayed tabling of action taken
report in the legislature, etc., defeated the purpose of the institution, It further noted that
constitution of SFCs should not be viewed as a mere constitution formality. It expressed
agreement with recommendations of a study commissioned by it that the SFCs should have
an 18 months life span and prescription of a six months time limit for the state governments
to act on the recommendations. It advised the states to follow central legislation and the
Rules in the matter of composition of SFCs.
The Second Administrative Reforms Commission (SARC) examined the organization and
working of the SFCs and made several recommendations. Quoting earlier studies, it noted
that the state governments treat the SFCs with scant respect partly due to their
membership composition that includes serving civil servants. State governments generally
take a long time to accept and act on the SEC recommendation. It observed that the
monitoring the implementation of the SFC recommendations is generally been weak. Its
recommendations include inter alia:
Prescribe through an Act the qualifications of persons eligible to be appointed as
members of SFC.
The ATR on the recommendations of the SFC must be placed in the legislature within
six months of submission and followed with an annual statement on the devolutions
made and the grants given to the individual local bodies and the implementation of
the recommendations through an appendix to the state budget document.
The healthy precedent established by the union government in generally accepting
the devolution proposals made by the union finance commission should also be
followed by the state governments with regard to the recommendations of the
SFCs. This will ensure effective and progressive devolution of functions and powers
to the local bodies and lead to empowerment.
It is necessary to put in place a mechanism to review the implementation of the
recommendations of the SFCs.
The recommendations of the 13th FC to prescribe qualifications of the members should be
viewed in the overall context of observations and concerns expressed by successive central
finance commissions and Second Administrative Reforms Commission on various aspects of
the constitution and working of the SFCs as well as on the utility of their reports. The
qualifications should, therefore, be viewed in a broader context and include other elements
that would facilitate effective working of the SFCs to deliver outputs expected of them to
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strengthen local institutions financially and otherwise, decentralize powers and functions as
envisaged under the Constitutional Amendment Acts.
In some states, the provisions relating to SFCs clearly indicate the qualifications or the
disciplines from which members should be drawn. For example, in Rajasthan, the Chairman
should be a person with knowledge of finance of accounts and government, experience in
financial matters and administration, knowledge of functioning of PRIs and municipal local
bodies and close association with preparation and implementation of rural and urban
development programmes. In Gujarat, Chairman should be a person experience in Public
Affairs and members should be a judge of a high court, knowledge of finance and accounts,
knowledge of finance and accounts of governments and local bodies, financial matters of
administration and knowledge of economics. These qualifications are very broad and
confined to disciplines and only to experience of individuals.
Even after the constitution of the SFCs, in some cases, they take a fairly long time to start
effective functioning due to absence of facilities staff etc. These aspects were mostly
referred by shall Finance Commissions in their reports. For example, the Second Haryana
State Finance Commission observed that even though the second SFC was setup vide
government notification dt. 6th September, 2000, it could not start work functioning
effectively till July 2002, it took long time in locating accommodation, allocation of
budgetary provisions and recruitment of technical staff. The Commission also emphasized
the need for an full-time Secretary and the composition should not be disturbed till the
completion of the task entrusted to it. This is clear when it said, The State Government
should constitute the State Finance Commission at an appropriate time and should ensure
that the composition is not disturbed till the completion of the task entrusted to it. Further,
the Member Secretary should be appointed on a full time basis. Member Secretary of this
Commission was not appointed on full time basis and there were frequent changes resulting
in discontinuity and cohesiveness of thoughts and methodology. Third Rajasthan State
Finance Commission has five member, two of whom were part time and this affected its
functioning. Similar observations were made by some other Finance Commissions as well.
This only underpins that effective functioning of the SFCs requires more than knowledge
and experience in specific disciplines or areas.
To enable the SFCs to discharge their constitutional functions require:
Taking a broader view of the term qualifications of members of SFC;

Taking the central legislation on the finance commission as a guide;
Establishing conventions on the lines of the central government; and
Taking administrative measures.
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The aspects that should be included under the head qualifications of members of SFC are:
1. Through amendments to Act
Disciplines to be drawn from:
Public Affairs, Law, Public Administration, Public Finance, Urban Governance
and Finance and Rural Local Governance and Finance
Synchronization
Need to keep the period to be covered by the next national Finance
Commission
This is possible only after amendments to the constitution as suggested by
the FCs.
Tenure
The term of the SFC should be 18 months
In exceptional cases, an extension up to a maximum of six months may be
provided.
Constitution
Should be constituted in a one attempt. There should not be frequent
reconstitutions.
Time frame for consideration of recommendations
Within three months synchronizing with the state budget
Placing ATR before legislature
Should be placed before the legislature within six months after submission of
the reports.
Nature of appointment
Members should be Fulltime.
Part-time members should be must be avoided unless expedient like Member
of Planning Commission being made as a part-time member of the central
finance commission
2.
Through Conventions
Acceptance of SFC recommendations as is the case with central finance commissions
Terms of reference should be provided at one time and not periodic additions or
alterations unless expedient
3.
Through administrative measures

Monitoring implementation of recommendations through a Cell at the state level in
the Finance Department
Similar Cells in the Urban Development Department or Directorates.
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Creation of enabling environment for the SFCs to work soon after their constitution
like provision of accommodation, staff, equipment like computers, communication
facilities, etc.
The recommendations of the 12th Finance Commission on the composition of SFCs is given
below for information.
1. Recommendations of the 12th Finance Commission on SFCs (8.34)

In the matter of composition of the SFCs:
States may be well advised to follow the central legislation and rules which
prescribe the qualifications for the chairperson and members and frame similar
rules.
It is important that experts are drawn from specific disciplines such as economics,
public finance, public administration and law.
In order that the concerns of both rural and urban local bodies are adequately
addressed, it is suggested that at least one member with specialization and/or
experience in matters relating to the PRIs and another similarly well versed in
municipal affairs must be appointed in the SFC.
The number of members including the chairperson may not exceed five excluding a
serving officer who may act as the secretary.
Since the SFCs are temporary bodies and dedicated efforts are called for to discharge
their functions within the time limit, all members and Chairperson should be full
time.
Frequent reconstitution of the SFCs should be avoided, as it disturbs the continuity of
approach and thought. The main reason for reconstitution appears to be the routine
transfers of serving officials. This situation will not arise if the SFC comprises non official
experts.
The Finance Commission (Miscellaneous Provisions) Act, 1951 is given in Annexure 6.1
The extracts relating State Finance Commissions in the Model Panchayat Raj Act circulated
by the Ministry of the Panchayat Raj, Government of India which cover some of the aspects
discussed earlier is given in Annexure 6.2.
The extracts of the provisions of the Panchayat Acts relating to SFCs of Andhra Pradesh,
Kerala, Gujarat, Rajasthan, West Bengal and Sikkim are given at Annexure 6.3.
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7. Levy of Property Tax without Hindrance

Condition # 6 of the 13th FC states that all local bodies must be fully enabled to levy
property tax (including tax for all types of residential and commercial properties) and any
hindrance in this regard must be removed. Having examined the inadequacies and wide
variations in the levy and collection of property tax system in the country and its potential to
mobilise resources which will enable them to provide civic services, the 13th FC recommended that
the urban local bodies should be enabled to levy property tax without any restrictions both on
residential and commercial properties. The state government should certify to this extent to
demonstrate compliance.
Cap on Taxing Powers

The powers of levy and collection of property tax by the urban local bodies are incorporated
in the Municipal Acts and the Rules made thereunder. Generally, the municipal councils are
empowered by the respective Acts to levy a percentage of the annual rental value of lands
and buildings or both as decided by the municipal council. Despite such provisions, states
impose certain restrictions or limitations on the councils discretion by fixing the percentage
of the rental value on lands and buildings. For example, in Andhra Pradesh, percentage of
property tax to be fixed by the councils shall be such that the incidence of property tax
together with the education tax and library cess shall not exceed 25% of the annual rental
value in case of residential buildings and 33% in case of non-residential buildings. This
imposes a limitation on the discretion of urban local bodies.
Exemptions
The Municipal Acts provide for exemption of property tax for certain categories of buildings
and lands like places of worship, recognized educations institutions, etc. This is apart from
central government properties exempted under the Constitution. However, apart from the
statutorily exempted buildings, state governments often exempt through executive
instructions some other categories also like houses of serving or retired military personnel.
This restricts the powers of the urban local bodies to levy property tax which results in loss
of income which is not often compensated by the state government.
Waiver of Penal Interest
The Municipal Acts provides, in some states, for the levy of penal interest on the delayed
payments of property tax. However, the state governments, through executive instructions
waive the penal interest as one time measures and this was repeated in subsequent years as
well cutting at the powers of the urban local bodies. Though, it is argued that such waivers
are aimed at motivating the defaulters to pay the property tax by saving the interest, and to
facilitate the urban local bodies to garner more resources through property tax, this eats
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into the discretionary powers of the local bodies. In one state, the C&AG in his report
suggested that such one time measures are recurring year after year and felt that the best
remedy against the defaulters is to take the penal action
Restrictions on Revision of Property Tax
During the revision of property tax periodically, the Rules or executive instructions impose
certain restrictions on enhancement of tax. For example, in Andhra Pradesh, as per the
instructions which now have been repealed, the enhancement on revision should not
exceed 75% in case of residential buildings and 100% and 150% in respect of non residential
buildings, which are more than 25 years old and less than 25 years old respectively. These
rules besides limiting the levy lead to discrimination.
The state Governments need to examine such restrictive clauses in the municipal laws and
ensure that they are removed to enable the urban local bodies to levy and collect property
tax which is in their domain. Or else, in all such cases the state government need to
compensate and periodically revise the compensation.
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8. State Property Tax Board

Condition 7 of the 13th FC states that the State government must put in place a state level
Property Tax Board. The 13th FC expressed concern over the inability of the urban local bodies to
fully exploit the property tax potential. Based on a study of 36 cities, the Commission noted wide
inter-city variations in the collection of property tax. Average per capita property tax revenue in
2006-07 in the study cities was Rs. 486, while highest per capita was Rs.1,334 in Mumbai and the
lowest was Rs.1,334 in Patna. Based on the study, the Commission projected that the property tax
revenues at all-India level could be between Rs.6, 274 to Rs.9, 424 crores. It noted that the
improving coverage and collection efficiency to 85% without changing any other variable, the
property tax revenues could increase to Rs.22, 000 to Rs. 32, 000 crores.
The Commission noted that there is tremendous scope for improvement in revenue
from property tax without increasing the rates and without any structural alteration of the
basis of levy. It desired that the urban local bodies should complete formal registration of all
properties whether assessable or not and follow it by assessment of all registered
properties. Noting that the real potential of property tax lies in correctly assessing the
property values and choosing appropriate rate structure, it suggested that an appropriate
strategy should be designed and it should include broadening the tax base by instituting GIS
for mapping properties in all cities with more a lakh population, establishing a central
valuation board, and improving collection efficiency, identifying tax evasion and delinquency
and enforcing penal provisions.
The Commission examined the organisation working of Municipal Property
Assessment Corporation, Ontario, Canada and West Bengal Valuation Board, India which
assist the municipalities in the assessment and valuation of properties for the levy of
property tax. The Commission noted that the MPAC provides a fine example of how
municipalities can combine to avail high value services aimed at enhancing the efficiency of
their main stay property tax collections.
The Commission recommended for the establishment of a state level Property Tax
Board, on the lines of West Bengal Valuation Board, to standardize property valuation. It
should be charged with setting guidance values and subsequent updating. The Board would
be responsible to:
a) enumerate or cause to enumerate all properties within the jurisdiction of the
municipalities and corporations;
b) review the present property tax revenue system and make suggestions for proper
assessment and valuation of properties; and
c) recommend modalities for periodic revisions.
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The Board will assist the urban local bodies to put in place an independent and transparent
procedure for assessing the property tax. It will communicate its assessments along with
suggestions and recommendations to the respective urban local bodies for necessary action.
This will take the levy of property tax, which is a very important source of revenue to the
local bodies, from the local politics.
The Commission recommended that at least 25 % of the estimated number of properties in
all the urban local bodies should be covered by 31 March, 2015. The details of the
organisation and modalities of work should be worked out by the state governments.
Compliance to this recommendation would be ascertained through passage of legislation or
issue of executive instructions as well as publication of the work plan of the Board in the
state gazette.
The Draft State Property Tax Board Bill, 2010 is given below and the West Bengal Valuation
Board Act, 1978 is given in Annexure 6.1 for information.
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Draft
The (State) Property Tax Board Bill, 2010
Statement of Objects and Reasons
The Thirteenth Finance Commission recommended for the setting up of a state level
Property Tax Board to assist the urban local bodies to put in place an independent and
transparent procedure for assessing property tax. The Commission also recommended that
the Board shall enumerate, or cause to enumerate, all properties in the urban local bodies
in the state and develop a data base; review the property tax system and suggest suitable
basis for valuation of properties, design and formulate transparent procedure for valuation
of properties, inspection for verification in urban local bodies in the State.
The constitution of a state level Property Tax Board is one of the pre-conditions to
access the performance grant recommended by the Commission for the local bodies. The
Board advises the state government and the urban local bodies on valuation of lands and
buildings. It aims at achieving uniformity and transparency in property tax assessment in all
the urban local bodies in the state and to introduce professionalism in the valuation of
properties.
Whereas it is expedient to establish a (State) Property Tax Board for the purpose of
valuation of lands and buildings in the state of..;
It is hereby enacted in the sixty first year of the Republic of India, by the Legislature
of .., as follows
1. Short title, extent and commencement
(4)
This Act may be called the State Property Tax Board Act, 2010
(5)
It extends to the whole of the state of
(6)
It shall come into force on such date as the State Government may by
notification appoint.
2. Definitions (1) In this Act, unless there is anything repugnant in the subject or context,
(a)
Board means the (State) Property Tax Board;
(b)
Fund means the State Property Tax Board Fund referred to in section 20;
(c)
Government means Government of -----(d)
Municipality means a municipal corporation or municipality or nagar
panchayat as defined in the State Municipal Acts, ..
(e)
Notification means a notification published in the Official Gazette of the
State Government;
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(f)
property tax means the property tax on the annual rental value of lands
and buildings determined and leviable under the Municipal Corporation Act,
Municipal Acts as the case may be;
(g)
prescribed means prescribed by rules made under this Act;
(h)
regulations means regulations made under section 30;
(i)
State Government means Government of ..
(2) Words and expressions used in this Act but not defined shall have the same
meaning as in the . Municipal Corporation Act, ..or the .Municipal
Act, as the case may be.
Act to override other laws With effect from the date of notification referred to in
(3)
sub-section (1) of section 13, the provisions of the Municipal
Corporation Act, or the Municipalities Act, ..or or any other law relating to
any of the matters provided for in this Act shall be deemed, in respect of such area, to have
been modified to the extent of the provisions made in this Act.
(4) Establishment of the Board
a.
The State Government may, by notification, establish, for the purposes of this
Act, a Board to be called the (State) Property Tax Board.
b.
The Board shall be a body corporate with perpetual succession and a
common seal and may sue or be sued in its corporate name and shall be competent to
acquire, hold and dispose of any property, both movable and immovable, to enter into
contracts and to do all things necessary for the purposes of this Act.
(5) Composition of the Board
a.
The Board shall consist of a Chairperson and such number of members not
exceeding four as determined by the State Government.
b.
The Chairperson shall be a person who is or has been an officer of the State
Government not below the rank of Secretary including ex-officio Secretary;
c.
The other members shall include those having knowledge and experience in
the fields of municipal administration, valuation of properties, accountancy, law,
engineering, and urban planning as the State Government may determine.
d.
The Chairperson and the members of the Board shall hold office for a period
of five years and the terms and conditions of their service, including salaries and
allowances, shall be such as may be prescribed by the State Government.
`Provided that on expiry of term of office as Chairperson or member, he shall not be
eligible for re-appointment as Chairperson or member or for further appointment to any
office of profit under the Government of the state or in any corporation, company, society
or university by or under the control of the Government of (State).
e.
The Board shall have a Secretary who shall be appointed by the State
Government.
(6) Appointment of Chairperson and Members
a.
The Governor shall, on the advice of the Chief Minister, appoint a person as
Chairperson and others as members of the (State) Property Tax Board.
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Provided that the Chief Minister before tendering advice to the Governor shall
consult with the Chairperson of the Legislative Council (where exists), the Speaker of the
Legislative Assembly of the State, the Leader of the Opposition in the Legislative Council
(where exists), and the Leader of Opposition in the Legislative Assembly of the State. If
there is no such Leader of Opposition, a person elected in this behalf by the Members of
the Opposition in the two Houses in such manner as Chairperson of the Legislative Council
or the Speaker of the Legislative Assembly as the case may be, may direct;
b.
The persons appointed as Chairperson and Member of the be the (State)
Property Tax Board shall, before entering upon office, make and subscribe before the
Governor an oath of affirmation according to the Form as prescribed.
(3) The person appointed as Chairperson or Member of the (State) Property Tax
Board may, by writing under his hand addressed to the Governor, resign his office; and
(4) The person appointed as Chairperson or Member of the (State) Property Tax
Board may be removed from office in the manner as prescribed.
Validation Notwithstanding anything contained elsewhere in this Act, no action of
(7)
the Board shall be invalid or otherwise called in question merely on the ground of the
existence of any vacancy in the office of the members of the Board.
(8) Functions of the Board
(1)
Enumerate, or cause to enumerate, all properties in the municipalities in the
state and develop a database;
(2) Review the property tax system and suggest suitable basis for valuation of
properties;
(3)
Design and formulate transparent procedure for valuation of properties,
inspection for verification in municipalities;
(4)
Undertake valuation or cause valuation of all properties in the Municipality in
the state including central, state or local body properties and exempted properties;
(5)
Recommend modalities for periodic revision;
(6)
Adjudicate property tax disputes and appeals;
(7)
Ensure quality in valuation of properties;
(8)
Ensure transparency in valuation process and facilitate disclosure of
valuations for fair comparison;
(9)
Publish the annual work plan in the Official Gazette of the Government;
(10) Render such advice on valuation of properties to a Municipality as the State
Government may, from time to time, require it to do or as the Board may consider
necessary for carrying out the purposes of this Act;
(11) Discharge such other functions in the field of valuation including
development expertise in valuation of land and building; and
(12) Undertake directly or through any institution, training of officers and
employees of Municipalities as the State Government may direct or as the Board may
consider necessary for carrying out the purposes of this Act.
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(9)
Organisation 1.The Board may be organized into three departments viz.,
Administration Department, Valuation Department and Research and Analysis Department.
Each Department may further be divided into Sections or Sub-sections as needed and
appropriate.
2.
The Board may establish regional offices in the state with appropriate staff
with the prior approval of the State Government;
3.
The Board may reorganize its departments and regional offices from time to
time as required to implement the provisions of the Act.
(10) Staff of the Board (1) With the approval of the State Government, the Board may
create such posts of officers and employees and fill such posts.
(2) The terms and conditions of service including salaries and allowances of the staff
appointed under sub-section (1) shall be determined by regulations.
(3) The Board may employ such staff of the State Government as the State Government
may make available and they are governed by such terms and conditions of service as
prescribed by the State Government.
(4) Without prejudice to the provisions of sub-section (1), the Board may for the purpose
of carrying on its functions under this Act, requisition the services of any officer or
employee of the State Government or any other agency.
(5) The staff referred to in sub-section (1) shall be under the administrative and disciplinary
control of the Board.
(11) Owner or occupier to file statement (1) Every owner or occupier or any land or
building shall file a statement before the Board in such manner and within such time
specifying such particulars as may be prescribed.
(2) Penalty Any person who
i.
fails to file the statement referred to in sub-section (1) within the prescribed
period, or files a false statement, or
ii.
fails to produce the accounts, registers or documents or to furnish the
information relating thereto when so required under section 18, or shall be punishable
with fine which may extend to one thousand rupees and when the offence is a continuing
one, with a daily fine not less than fifty rupees per day during the period of continuance of
the offence.
(12) Determination of valuation and its duration
a.
The State Government shall, from time to time by notification, specify the
municipality where, the general valuation of lands and buildings shall be made by the
Board, in accordance with the provisions of ..Municipal Corporation Act, or the
. Municipal Act, or any other law for the time being in force in such
municipality, as the case may be, in so far as they relate to the determination of annual
valuation:
Provided that the Board may make, subject to such conditions as may be prescribed,
the general valuation of lands and buildings in the municipality as aforesaid under its
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superintendence, direction and control on payment of such remuneration as it may

determine, and every such valuation shall be deemed to have been made by the Board.
b.
The valuation made by the Board shall become operative with effect from
such date, as the State Government may, by notification, appoint in this behalf and shall
remain in force in respect of such area for a period of five years and may be revised
thereafter at the termination of successive period of five years:
Provider further that the valuation of lands or buildings in any municipality made in
accordance with the provisions of the Municipal Corporation Act,
.Municipal Act, or any other law shall remain in force for the period for which it was
made under the Municipal Corporation Act, .Municipal Act, or any other
law, as the case may be.
c.
Notwithstanding anything contained in sub-sections (1) and (2), if, during the
currency of any period referred to in sub-section (2), any new building is erected, or any
existing building is reconstructed or altered or improved, in any municipality, the
determination of valuation of such premises shall be subject to the same criteria as has
been fixed by the Board for such premises, and its valuation shall be covered by such
procedure as may be determined by the Board for its immediate valuation with prior
mandatory filing of statement of particulars under section 11 by the owner or occupier.
The valuation so made shall remain in force from the half-year intimated by the
Municipality for the unexpired portion of the period referred to in sub-section (2).
d.
The Municipality shall in each year and within such time, as may be
prescribed, send to the Board a list of all new buildings erected and also all existing
buildings reconstructed or substantially altered or improved within its jurisdiction together
with suggested valuation in terms of Boards guidelines for finalization and approval of
valuation by the Board.
(13) Publication of draft valuation list
(1) When the valuation under section 12 of the lands and buildings in any
Municipality has been completed, the Board shall cause such valuation list and the amount
of property tax thereon to be entered in a list.
(2) The Board shall publish the draft valuation list, prepared under sub-section (1),
in such manner, as may be prescribed and shall specify a date within which an application
for objection to the draft valuation list may be filed.
(14) Hearing of Objections on valuation
a.
After the expiry of the date specified in sub section (2) of section 13 and within
such period thereafter as may be prescribed, the objection of any entry in the draft
valuation list shall be determined after giving the applicant an opportunity of being heard,
by such officer or officers of the Board as may be specified by the Board in this behalf.
(2)The objection shall be filed and determined in such manner as may be prescribed.
(15) Publication of final valuation list When the applications, if any, have been
determined under sub-section (1) of Section 14, the Board shall prepare a final valuation
list and shall give public notice of the place or places where such list may be inspected and
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the valuation together with the amount of property tax thereon as recorded in the final
valuation list shall be conclusive.
(16) Alteration or amendment of valuation list a.
Notwithstanding anything contained in section 15, the Board may at any time
on an application filed by a owner or occupier or by the municipality or suo moto; and
after recording the reasons therefor, direct any alteration or amendment of the valuation
list
i.
by inserting therein the name of any person whose name ought to be
inserted; or
ii.
by inserting therein any land or building previously omitted together with
the valuation thereof; or
iii.
by striking out the name of any person or any land or building not liable
for payment of property tax; or
iv.
By increasing or decreasing the annual valuation of any holding which, in
the opinion of the Board, has been substantially under valued or over-valued by
reasons of fraud, mis-representation mistake, error, or inadvertence, or subsequent
construction; or]
v.
By correcting any patent error or omission.
(17) Production and inspection of accounts and documents The Board or any of its
officer authorized by the Board may, subject to such conditions as may be prescribed,
require the owner or the occupier of any land or building to produce before the Board of
such officer within such time as the Board or such officer may fix any accounts, registers or
documents or to furnish any information relating thereto as may be considered necessary
for the purpose of this Act and the owner or the occupier shall comply with such
requisition.
(18) Power to enter into land or building
a.
Any officer of the Board, when so authorized by it in writing, may, without
giving any previous notice to the owner, or the occupier, of any land or building, enter into
such land or building and make an inspection or survey, or take measurements, thereof for
the purpose of valuation.
b.
If such entry is refused, or any objection to such entry is made, the officer
authorized under sub-section (1) may give notice in writing to the owner or the occupier of
such land or building of his intention to enter into such land or building, and the owner or
the occupier of such land or building shall, upon such notice being duly served on him,
extend all facilities as may reasonably be expected of him to such officer for entering into
such land or building and for making inspection or survey, or for taking measurements,
thereof, as the case may be, for the purpose of valuation.
(19) Fund of the Board
a.
The Board shall have a Fund to be called the State Property Tax Board fund to
which shall be credited
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i.
such moneys as may be paid to the Board by the State Government or any
other authority or agency, and
ii.
such moneys as may be paid to the Board by the Municipalities, and other
local authorities under section 21,
b.
All moneys received by the Board shall be deposited in the . Bank
or in one or more nationalized banks as prescribed.
(20) Municipalities to make payment to the Board
a.
The Municipality, in respect of which notification under sub-section (1) of
section 12 has been made, shall pay to the Board such proportion of the expenditure
incurred by the Board on account of the valuation and determination of property tax, as
the case may be,
b.
The Board shall calculate the amount payable by the Municipality under subsection (1) and may require the concerned Municipality to pay the amount within such
time as may be prescribed.
c.
If the amount is not paid within the prescribed time, the Board may refer the
matter to the State Government and the State Government may pay the amount to the
Board and deduct the same from any grant payable by the State Government to the
Municipality.
(21) Expenditure incurred on account of salaries and allowances including
contingencies
a.
The expenditure incurred by the Board for meeting the salaries and
allowances including contingencies of the Chairperson, members, Secretary, officers and
employees serving under or for the Board shall be defrayed out of the Fund to be provided
by the State Government.
b.
The expenditure towards contingencies for undertaking normal activities of
the Board shall be met out of the Fund provided by the State Government.
(22) Annual Report
The Board shall prepare an annual Report of its activities during the year in such form as
may be prescribed by the State Government and the Annual Report shall be placed before
the Legislature of the state.
(23) Budget
a.
The Board shall prepare each year in such form and within such time, as may
be prescribed, a budget in respect of the ensuing financial year, showing the estimated
receipts and expenditure and shall forward a copy of the same to State Government for
approval.
b.
The State Government may, in according such approval, make such additions,
alterations, and modifications thereon as it thinks fit:
Provided that before making such additions, alterations or modifications the State
Government shall give the Board an opportunity to express its views thereon with such
period as may be prescribed.
(24) Expenditure and accounts
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a.
The Board shall have the same financial powers as are exercisable by the
Secretary or a Head of the Department of the State Government. Matters beyond such
financial powers shall be referred by the Board to the State Government for decision.
b.
The Board shall keep accounts of all receipts and expenditure, and prepare
annual accounts in such manner as may be prescribed.
(25) Audit a.
The Board shall cause its accounts to be audited annually by an auditor to be
appointed by the State Government and the auditor so appointed shall have the right to
demand the production of books, accounts, documents and other papers of the Board.
b.
The annual accounts prepared as per the provisions of sub-section (2) of
section 23 shall be placed to the auditor for audit. As soon as the accounts have been
audited, the Board shall send a copy thereof together with a copy of the report of the
auditor to the State Government.
c.
The Board shall comply with such directions as the State Government may,
after perusal of the report of the auditor, think fit to issue in this behalf.
d.
The Board shall pay out of the Fund such sum as may be determined by the
State Government by way of fees if any for such audit.
(26) Delegation of powers and functions by Board
a.
The Board may delegate any of its powers and functions including financial
powers to the Chairperson of the Board by a resolution adopted by it in this behalf except
the powers under sections 9 and 10.
b.
The Board may also delegate any of its powers or functions to the Secretary
or any officer of the Board by a resolution adopted by it in this behalf.
(27) Members, officers and employees to be public servants Every member of the
Board or every officer or employee of the Board shall, when acting or purporting to act
under the provisions of this Act, be deemed to be a public servant within the meaning of
section 23 of the Indian Penal Code (Central Act No. 45 of 1860).
(28) Power to make rules
a.
The State Government may, by notification, make rules for carrying out the
purposes of this Act.
b.
In particular, and without prejudice to the generality of the foregoing powers,
the government may make rules relating to meetings of the Board, working procedures,
matters relating to officers and employees of the Board and in such other matters; and
such rules may provide for all or any of the matters which may be or is required to be
prescribed.
c.
All Rules made by the State Government shall be published in the Official
Gazette.
(29) Power to make regulations
Page 46
th
a.
The Board may, with the previous approval of the State Government, make
regulations consistent with the provisions of this Act and the rules made there under for
carrying out the purposes of this Act.
b.
The State Government may, in according such approval, make such additions,
alterations and modifications therein as it thinks fit:
Government shall give the Board an opportunity to express its views thereon within such
period not exceeding two months as may be specified by the State Government.
c.
All regulations made by the Board and approved by the State Government
shall be published in the Official Gazette.
Page 47
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9. Standardised Service Level Benchmarks

Condition 8 of the 13th FC states that the State government must gradually put in place
standards for delivery of essential services provided by local bodies. The 13th FC observed that
either due to paucity of finances or for other reasons there has been a dilution in the quality of
services being provided by the local bodies. The local bodies in their representations to the
Commission indicated their inability to meet the basic needs or core services like drinking water,
sewerage, solid waste management and street lights at acceptable levels of service. It referred to the
Ministry of Urban Developments observations relating to urban sector challenges particularly
population increase and below normal delivery of core services. Two thirds of the projected
population increase of the country by 2026 would be in the urban areas and in India, 38% of
population would live in urban areas. It highlighted that only 70% of urban households have access
to piped water, only 74% have access to latrines, only 23% of sewage is treated and only 30% solid
waste generated is treated before disposal. The status of other services is no better and requires
investments.
The 13th FC recommended that the State governments must put in place standards
for delivery of essential services provided by the local bodies. It also recommended that the
state government must notify or cause the local bodies to notify by the end of every fiscal
year the standards to be achieved for all essential services proposed to be achieved by them
by the end of succeeding fiscal year. Recognising the enormity of the process, the 13th FC
suggested initially four services viz., water supply, sewerage, solid waste management, and
storm water drains to be taken up. The standards for achievement should be decided
through a consultative process. The process of benchmarking should be on the lines of the
Handbook on Service Level Benchmarks published by the Ministry of Urban Development,
Government of India. A notification indicating the standards to be achieved by the urban
local bodies should be published in the state gazette to ensure compliance.
The process of benchmarking and methodology to be adopted at the local body level
to assess the current status and preparation of Information System Improvement Plan and
Performance Improvement Plan on the essential services is given in the Diagram below. The
MoUD, GoI has circulated The Handbook on Service Level Benchmarking giving details of
the benchmarking methodology to be adopted by the ULBs which can be accessed at:
http://www.urbanindia.nic.in/programme/uwss/slb/slb.htm
Page 48
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Diagram: Benchmarking Methodology
To support the state governments and urban local bodies to initiate and complete the
Benchmarking process during the year to enable them to access funds under the 13th FC, the
Ministry of Urban Development, Government of India is launching a training program to all
the related functionaries. The Administrative staff College of India (ASCI) would undertake
and co-ordinate the National Rollout Service Level Benchmarking through the identified
resource institutions at state and regional levels. The ASCI would also extend the necessary
handholding support to the state governments and resource institutions to initiate and
implement service level benchmarking process in the states.
The indicators identified for the four sectors along with the national benchmarks are given
in the following table. The state s and urban local bodies have to put in concerted efforts to
work out the details of the current status on each of the indicators and the targets they
propose to achieve during the next fiscal year and publish the same in the official State
Gazette.
Page 49
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Table: Service Level Indicators and National Benchmarks across Four Sectors
Water Supply Indicators
1
2
3
4
5
6
7
8
9
Coverage of water supply connection

Per Capita supply of water
Extent of metering of water connection
Extent of non-revenue water
Continuity of water supply
Efficiency in redressal of customer complaints
Quality of water supplied
Cost Recovery in water supply services
Efficiency in collection of water related charges
1
2
3
4
5
6
7
8
9
Sewerage and Sanitation Indicators

Coverage of Toilets
Coverage of waste water network services
Collection efficiency of waste water network
Adequacy of waste water treatment capacity
Quality of waste water treatment
Extent of reuse and recycling of treated waste water
Extent of cost recovery in waste water management
Efficiency in collection of sewerage charges
2
3
4
5
6
7
8
Solid Waste Management Indicators

Household level coverage of SWM services through
door-to-door collection of waste
Efficiency of collection of MSW
Extent of segregation of MSW
Extent of MSW recovered
Extent of Scientific disposal of MSW
Extent of cost recovery for the ULB in SWM services
Efficiency in collection of SWM charges
1
2
Storm Water Drainage Indicators

Coverage
Incident of water logging
National
Benchmarks
100 %
135lpcd
100 %
15 %
24X7
80 %
100 %
100 %
90 %
State
City Status
Benchmarks 2010-11
Target for
2011-12
100 %
100 %
100 %
100 %
100 %
20 %
100 %
80 %
90 %
100 %
100 %
100 %
80 %
100 %
100 %
80 %
90 %
100 %
0
Page 50
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10. Fire-hazard Response and Mitigation Plan

Condition 9 of the 13th FC states that all municipal corporations with a population of more
than one million must put in place a fire hazard response and mitigation plan for their
respective jurisdictions. The 13th FC observed with concern the dismal status of fire services
in the country. There is a very high level of deficiency in fire stations, fire personnel as well
as fire fighting and rescue vehicles. The commission underpinned the need to restructure
for emergency fire services in rural and urban areas of the country. As revamping fire
services requires, considerable resources and time the Commission recommended to
initiate the process in the entire corporation with more than a million population. It
recommended that these corporations should put in place a fire hazard response and
mitigation plan for their cities. They should also publish the plans in the state Gazette.
Recognizing the criticality of the service, the Commission suggested that the funds
allocated by 13th FC may be used for revamping fire services in their jurisdiction. They can
also extend financial support to state Fire Services Department in this effort. The
Commission further noted that cities can draw expertise from the state level agencies as
well as the national disaster management agency in revamping and strengthening the fire
service and in preparing and implementing fire hazard response and mitigation plan.
The 13th Finance Commission also recommended substantial grants to states for disaster
relief and related capacity building purposes. The National Disaster Management Authority
which is responsible for laying down the policies, plans and formulation of guidelines for
disaster management, including fire hazards, is also formulating the guidelines for the
preparation of fire hazard response and mitigation plan for the metropolitan cities. In fact, it
is working on a broader framework of strengthening fire services systems in the entire state.
The guidelines for the preparation of fire-hazard response and mitigation plan for the
metropolitan cities may be ready in the next few weeks and circulated to the states for
further action.
Page 51
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11.
General Recommendations
The 13th FC made several recommendations to improve the financial status of the local
bodies and to strengthen the local governance though their compliance is not a condition to
access either the basic or the performance grant. These recommendations relate to
augmentation of ULB finances. They include:
The ULBs should exploit the scope that exists in property tax and profession tax;
The ULBs should recover at least the operation and maintenance costs of the services
they render. This is one of the mandatory reforms under JnNURM.
But unfortunately, the states have not done enough to ensure that this mandatory
requirement is complied with even in the Mission cities;
Levy of user charges on roads if construction of any road in the city leads to tangible
commercial benefit;
ULBs should access market based financing of infrastructure and desired that Pooled
Financing Model should be fully exploited;
Urban Development Authorities should share a percentage of their income including
income from sale or lease of land with ULBs;
The ULBs should be enabled to levy and collect user charges from the central
properties. For this purpose it suggested enactment of suitable legislation to regulate
the levy of user charges.
State governments should share a portion of mining royalties with ULBs;
The states should incentivise revenue collection efforts of ULBs through matching
grants;
Speedy implementation of JnNURM reform relating to assigning or associating ULBs in
planning and delivery functions;
The city development plans being prepared by the cities must incorporate civilian
portions of the Cantonments to facilitate integration in service delivery like water
supply and other schemes and the civil community should benefit from the schemes
being implemented under JnNURM or other projects;
A portion of 13th FC grants to ULBs may be spent on revamping fire services and the
ULBs may also extend financial support to the Fire Services Department;
Formulation of guidelines for the constitution or upgradation of nagar panchayats;
Developing and using comparable and audited data in all the ULB; and
Strengthening Local Fund Audit Department through capacity building and personnel
augmentation, etc.
Release of Grants recommended by the Commission in two instalments in January and
July subject to submission of utilisation certificates without any other documentation;
Page 52
th
12.
Way Forward
In the earlier chapters of this Compendium we have presented a summary of the 13th FC
recommendations focusing on the performance grants and the conditionalities that go with
it. The current practices in different states relating to the conditions stipulated by the 13th
FC and related legislations and extracts of different legislations that have a bearing on
complying with the 13th FC, States have initiated the process to operationalise the
recommendations and are looking forward for existing practices and guidelines to work on
this compendium facilitates this process. Table 12.1 gives a gist of the practices relating to
the conditions stipulated by the 13th FC for information.
Table 12.1 Abstract of Current Practices Relating to 13th FC Conditions

Reform Recommended
legislature

Ombudsman.
grants provided by the 13th FC to the
constitution.
removed.

Kerala submits a supplement to budget on LSGIs
Most states initiated the process of introducing Double Entry
Accounting System as per NMAM
18 states entrusted TG&S to CAG. Others need to follow.
C&AG Report laid on the table of the Legislature in AP,
Karnataka (PRIs), Kerala, Tamil Nadu, Maharashtra, Rajasthan
Provision in Karnataka Panchayat Act, 1993 and Kerala
Municipality Act, 1994
LFA Report laid on the table of the legislature in West Bengal
as per PR Act
LFA Report laid on the table of the legislature in AP as per
State Audit Act
Kerala is the only state where Local Body Ombudsman was
constituted and is functional
Provision exists in Orissa Corporations Act
Tamil Nadu Once the GoI and GoTN funds are released to
CMA, they are transferred to ULBs through Electronic
Clearance System (ECS).
In TN at state level conventional system is still in operation.
Karnataka - Development funds transferred electronically on
similar lines
All states have not clearly prescribed qualifications
Some states included the disciplines to draw the members.
th
12 FC suggested qualifications to be prescribed by states.
The Finance Commission (Miscellaneous Provisions) Act, 1951
provides guidance.
In some states the Acts/Rules have provisions restricting the
powers of the Councils to fix the percentage of ARV, or
restrictions on the total increase in tax as a result of revision,
exemptions outside the statues through instructions, waiver
of penalty on property tax, etc. They need to be reviewed and
removed .
West Bengal is the only state where the state Property
Valuation Board exists.
The MoUD prescribed the benchmarks relating to water
supply, sewerage, SWM, and sanitation and piloted the
Page 53
th

process in some cities.

Some states like Andhra Pradesh, Karnataka, and Madhya
Pradesh initiated the benchmarking process in all ULBs.

Compliance to the conditions stipulated by this 13th FC is a pre-condition to access the funds
under this component of the grant. The 13th FC also stipulated the compliance mechanism
for each of the conditions which are again given in Table 12.2.
Table 12.2 Compliance to 13th FC Conditions

Reform Recommended

1. Submission of relevant supplement to the budget

document
2. Certification that accounting systems as per NMAM have
been introduced in all urban local bodies
1. Certification from C&AG that TG&S was given to C&AG,
CA&Gs Annual Technical Inspection Report and Annual
Report of the Director of Local Fund Audit were placed before
the Legislature

legislature
Ombudsman.
th
constitution.
removed.
1. Passage of legislation on Local Body Ombudsman and its

notification
2. Certification by the state government relating to transfer of
functionaries from Lok Ayukta to the Local Body Ombudsman
1. Certification by the state government along with a
description of arrangements put in place for electronic
transfer of grants to local bodies
1. Passage of legislation on qualification of persons eligible for
appointment as members of SFC
1. Certification by the state government that the hindrances

to levy property tax by local bodies have been removed.
1. Passage of legislation or issue of instructions for the

creation of Property Tax Board.
2. Publication of work plan by the Board in State Government
Gazette
1. Publication of benchmarks and targets proposed to be
achieved by the end of succeeding fiscal year by urban local
bodies in State Government Gazette
Page 54
th

1. Publication of respective hazard response and mitigation

plans in State Government Gazette.
Discussions with some state governments brought out that they have already initiated the
process. Some states have constituted committees are working groups to work out details.
Some have established state level cells to monitor implementation process. Some of these
recommendations like establishment of Property Tax Board and Local Body Ombudsman,
require legislative enactments, service level benchmarking requires collection of data on the
current status, finalizing the standards and stipulating the targets and preparation of action
plans. This a long process which every state need to adopt as per the Handbook
Standardised Service Level Benchmarks. Some states proposed to extend this process to all
the urban local bodies in the state. The Ministry of Urban Development to support the state
governments on this effort is proposing a capacity building roll out plan.
Some of the conditions of the FC, like prescription of qualification of SFC members are
common to both urban and rural bodies and the departments of Panchayat Raj are taking
initiative in such cases and the urban development department need to liase with the those
departments to provide inputs on aspects relating to local bodies. Similarly, implementation
of conditions like inclusion of supplement to budget on ULBs and electronic transfer of
finance grants or mostly in the domain of finance departments and the urban development
department need to liaise with the finance department to provide inputs on aspects relating
to urban local bodies.
The monitoring the complaints with the conditions as well as implementation of projects
financed under 3th FC grants need to be continuously monitored for better compliance and
impact, mechanisms at national state levels need to be established for the purpose and
detai;ls are to be worked out. To support the state government in implementation of 13th FC
recommendations and to monitor progress periodically Ministry of Urban Development has
developed a Finance Commission Cell in the Ministry with the support of National Institute
of Urban Affairs and Admisnstrative Staff College of India. ASCI has already hosted a website
which is periodically updated with current practices of the states and cities. The website can
be accessed at
http://www.asci.org.in/13thFC-Urban/index.html
Page 55
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Annexures
2.2 2.1. The Budget Provisions to LSGIs (Municipalities and Municipal Corporations)
in 2010-11 for Traditional Functions and Maintenance of Assets
2.2.
2.3.
2.4.
2.5.
57
The Budget Provisions to LSGIs (Municipalities and Municipal

Corporations) in 2010-11 for Development Expenditure
60
Estimates of Assistance to Panchayat Raj/ Nagarapalika Institutions for

2010 -11 - Plan Grants
63

2010 -11 - Non Plan Grants
67
Details of Distribution of Development Funds to Local Self Government

Institutions District-wise in 2010-11
74
2.6. 2.6. Details of Flow of Funds to Agartala Municipal Council and 15 Nagar
Panchayats in Tripura during 2010-2011
75
3.1 The C&AGs letter to Honble speakers of state legislatures along with
Office Memorandum of the Ministry of Urban Development requesting
the state governments to take necessary action
87
C&AGs (Duties, Powers and Conditions) Act, 1971
79
3.1. The Kerala Panchayat Raj Act, 1994
82
3.2. The Specimen Municipal Law for Municipalities in India, 2002
89
3.3. The relevant provisions relating to Ombudsman for Panchayats of Model

Panchayat Raj legislation.
93
5.1. The Finance Commission (Miscellaneous Provisions) Act, 1951
100
5.2. The extracts relating State Finance Commissions in the Model Panchayat Raj
Act circulated by the Ministry of the Panchayat Raj, Government of India
103
5.3. The extracts of the provisions of the Panchayat Acts relating to SFCs of
Andhra Pradesh, Kerala, Gujarat, Rajasthan, West Bengal and Sikkim.
105
8.1. The West Bengal Valuation Board Act, 1978.
108
Page 56
th
Annexure 2.1
1. The Budget Provisions to LSGIs (Municipalities and Municipal Corporations) in
2010-11 for Traditional Functions and Maintenance of Assets
BUDGET PROVISION TO LOCAL SELF GOVERNMENT INSTITUTIONS IN
2010-11 FOR TRADITIONAL FUNCTIONS AND MAINTENANCE OF ASSETS
Budget Provisions to Municipalities
(Rs. In Thousands)
Maintenance
No.
Local Self
Governme
nt
3
Code
1
2
I. Thiruvananthapuram
1 M010100
Venkata
2 M010200
Attingal
3 M010300
Nedumangad
4 M010400
Nayyattinkara
II. Kollam
5 M020100 Paravoor
6 M020200 Punalur
III. Pathanamthitta
7 M030100 Adoor
8 M030200 Thinuvalla
9 M030300 Pathamathitla
IV. Alappuzha
10 M040100 Chenganur
11 M040200 Mavellkara
12 M040300 Cherthala
13 M040400 Kayamkulam
14 M040500 Alappuzha
V.Kottayam
15
M050100 Pala
16
M050200 Vaikom
17
M050300 Changanassery
18
M050400 Kottayam
VI. Idukki
19
M060100 Thodupuzha
VII. Ernakulam
20
M070100 Kalamassery
21
M070200 Kothamangalam
22
M070300 Ankamaly
23
M070400 Thripunithura
24
M070500 Muvattupuzha
25
M070600 N. Parur
26
M070700 Perumbavoor
27
M070800 Aluva
VIII. Thrissur
Net
Amou
nt
7
Gross
Amoun
t
8
Road
Uns
pen
t
Amt
9
18
0
08
0
3814
3028
6242
6850
2460
5065
3715
1828
0
0
0
0
2460
5065
3715
1828
3530
6037
571
1043
2969
4904
4857
6414
841
503
4016
5911
3534
7285
4760
2919
6532
4193
1331
2795
2982
1588
3737
1211
2444
4731
2842
0
0
0
2444
4731
2842
3431
3754
5746
8906
23168
2547
2660
4605
7089
19836
664
456
842
614
4208
1883
2204
3763
6476
15538
2699
1985
1746
4127
2144
0
58
176
0
650
2699
1927
1570
4127
1494
2905
2892
6957
8377
2256
2234
4972
6779
148
0
0
1891
2108
2234
4972
4888
4651
306
9065
10922
0
0
0
0
4651
3064
9065
10922
5391
5069
2174
2895
4033
4033
7207
4713
4030
6775
3680
3701
3273
3286
5829
4017
2963
5104
2587
3029
2311
2029
1570
0
715
185
45
0
0
204
4259
4017
2248
4919
2542
3029
2311
1825
5224
5080
3254
3017
3841
3909
4826
4064
0
0
0
0
0
0
0
0
5224
5080
3254
3017
3841
3909
4826
4064
Tradi
tional
Funct
ions
4
Gro
ss
Am
oun
5
5171
4328
6615
8418
3832
3028
6340
6850
4933
6137
Non-Road
Unspe
nt Amt
to be
deduct
6
Page 57
Net
Amount
10
th

28
M080100
29
M080200
30
M080300
31
M080400
32
M080500
33
M080600
XI. Palakkad
34
M090100
35
M090200
36
M090300
37
M090400
X.Malappuram
38
M100100
39
M100200
40
M100300
41 M1 00400
42 M100500
XI
Kozhi
43 M110100
44 M110200
XII
Wayn
45 M120100
XIII
Kannu
46 M130100
47 M190200
48 M190300
49 M190400
50 M130500
51 M130600
XIV
Kasar
52 M140100
53 M140200
Gruvayur
Chavakkad
Kodugallur
Chalakkudi
Irinjalakuda
Kunnamkulam
2683
5012
4144
5977
3645
6852
1806
3964
3369
4465
2520
5213
80
324
303
2029
0
3063
1726
3640
3066
2436
2520
2150
3445
2952
2683
8461
4874
4000
0
0
0
1464
0
0
3445
2962
2683
7007
4874
4000
Ottappalam
Shomur
Chittur
Thathamangalam
Palakkad
5862
5245
4251
16352
5342
4388
3548
12448
0
1321
803
7284
5342
3067
2746
5164
2984
2937
3143
14875
0
187
0
0
2984
2750
3143
14875
Perinthalmanna
Ponnani
Manjari
Tiru
Malappuram
5177
10944
9197
6559
6591
4330
8481
7827
4489
5961
324
3782
2236
1985
2334
5667
3239
2909
0
404
0
0
1062
4006
4679
5591
4489
4909
0
0
1985
1980
5667
3239
2909
Vatakara
Koyilandy
8459
9607
6966
6301
2363
1279
4603
5022
4763
2635
0
0
4763
2635
Kalpetta
3299
11389
4315
7074
2460
2460
Maltanmur
Thalipparamba
Koothuparamba
Payyannur
Thalaswery
Kannur
5372
11058
3834
8493
17133
863
5573
9777
3106
7155
12146
5455
2121
4236
239
1284
2207
1228
3452
5541
2967
5871
9939
4227
2001
3964
3064
4492
7652
11619
0
0
0
278
0
0
2001
3964
3064
4214
7662
11619
Kanhangad
Kasargod
Total
7581
6649
347962
7946
4955
288077
2696
1239
68452
5250
3716
219625
3509
5889
23061
0
0
5292
3509
5889
224769
Page 58
th

2010-11 FOR TRADITIONAL FUNCTIONS AND MAINTENANCE OF ASSETS
Budget Provisions to Corporations
(Rs. In Thousands)
Maintenance
No.
Code
Local Self
Government
Traditional Functions
(Rs. In Thousands)
160771
Non Road
Gross
Unspent
Amount
Amt to
be
deducted
5
6
72503
0
Net
Amount
Gross
Amount
7
72503
8
37306
Unspent
Amt to
be
deducted
9
322
Road
Net
Amount
1
1
2
C010100
3
Thirvanathapuram
C020100
Kollam
78977
35986
11877
24109
13653
4562
9091
C070100
Cochin
128864
51311
51311
69834
7487
62347
C080100
Thrissur
67741
27895
2086
25809
11303
11303
C110100
Kozhikode
95823
39351
11556
27795
32798
32798
532176
227046
25519
201527
164894
12371
152523
Total
Page 59
10
36984
th
Annexure 2.2
The Budget Provisions to LSGIs (Municipalities and Municipal Corporations)
in 2010-11 for Development Expenditure
2010-11 FOR DEVELOPMENT EXPENDITURE
Provision to Municipalities
No.
Code
Municipality
General
Sector
SCP
TSP
(1)
(I)Thiruvananthapuram
1
2
3
4
(2)
(3)
(4)
(5)
(6)
(Rs. In thousands)
Amount
deducted
Net
Total
from 2010 Allocation
11
(7-8)
allocation
(7)
(8)
(9)
M010100
M010200
M010300
M010400
Total
Varkala
Attingal
Nedumangad
Neyyattinkara
(1)
16473
13593
29321
30583
89970
11690
7093
10932
14358
44073
0
0
0
0
0
28163
20686
40253
44941
134043
0
0
0
0
0
M020100
Total
M030100
M030200
M030300
Total
Paravoor
(II)
Adoor
Thiruvalla
Pathanamthitta
15613
41897
12896
27824
18947
59667
8795
16259
6110
9060
6475
21645
0
915
0
0
0
0
24408
59071
19006
36884
25422
813132
0
0
0
231
0
231
81081
10736
10789
21097
32074
89836
164532
5277
7733
2928
8663
7079
31680
0
0
0
0
0
0
16013
18522
24025
40737
96915
196212
981
2189
3
0
0
3173
15032
16333
24022
40737
96915
193039
28163
20686
40253
44941
134043
(II) Kolalm
5
7
8
9
(IV) Alappuzha
10
11
12
13
14
(V) Kottayam
15
16
17
18
VI) Idukki
19
(VII) Ernakulam
20
21
22
(III)
24408
59071
19006
36653
25422
M040100
M040200
M040300
M040400
M040500
Total
Chengannur
Mavelikkara
Cherthala
Kayamkulam
Alappuzha
(IV)
M050100
M050200
M050300
M050400
Total
Pala
Vaikkom
Changanassery
Kottayam
(V)
10418
10183
21275
27173
69049
1183
3458
7795
8198
20634
0
0
0
0
0
11601
13641
29070
35371
89683
0
0
0
0
0
11601
13641
29070
35371
89683
M060100
Thodupuzha
25520
4044
29564
797
28767
M070100
M070200
M070300
Kalamassery
Kothamangalam
Angamaly
27070
18281
14193
10122
4258
2759
0
0
0
37192
22539
16952
0
0
0
37192
22539
16952
Page 60
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23
24
25
26
27
(VIII) Thirsuur
28
29
30
31
32
33
(IX) Palakkad
34
35
36
37
(X) Malappuram
38
39
40
41
42
(XI) Kozhikode
43
44
(XII)
Wayanad
45
M070400
M070500
M070600
M070700
M070800
Total
Thirppunithura
Muvattupuzha
North Paravoor
Perumbavoor
Aluva
(VII)
24631
12223
13573
10460
9151
129582
11974
3152
2710
4537
1844
41356
0
0
241
0
0
241
36605
15375
16524
14997
10995
171179
0
0
0
0
0
0
36605
15375
16524
14997
10995
171179
M080100
M080200
M080300
M080400
M080500
M080600
Total
Guruvayur
Chavakkad
Kodungallur
Chalakkudy
Irinjalakkuda
Kunnamkulam
(VIII)
9419
17320
15254
20669
11080
22388
96130
3797
4837
5703
6023
5618
11316
37294
0
0
0
0
0
0
0
13216
22157
20957
26692
16698
33704
133424
0
0
817
0
0
0
817
13216
22157
20140
26692
16698
33704
132607
M090100
M090200
M090300
M090400
Total
Ottappalam
Shornur
Chittoor
Thathamangalam
Palakkad
(IX)
24677
18828
14529
56653
114687
8546
17083
7563
20346
53538
0
0
0
0
0
33223
35911
22092
76999
168225
0
1312
0
2203
3515
33223
34599
22092
74796
164710
M100100
M100200
M100300
M100400
M100300
Total
Perinthalmanna
Ponnani
Manjeri
Thirur
Malappuram
(X)
20952
38684
38963
21217
29634
149450
8895
10858
14210
5268
5543
44774
0
0
0
0
0
0
29847
49542
53173
26485
35177
194224
0
0
6684
0
0
6684
29847
49542
46489
26485
35177
187540
M110100
M110200
Total
Vadakara
Quilandy
(XI)
32449
29218
61667
3212
8646
11858
0
0
0
35661
37864
73525
0
0
0
35661
37864
73525
M120100
Total
Kalpetta
(XII)
49722
49722
4314
4314
7143
7143
61179
61179
0
0
61179
61179
M130100
M130200
M130300
M130400
M130500
M130600
Total
Mattannur
Thaliparamba
Koothuparamba
Payyannur
Thalassery
Kannur
(XIII)
26387
36249
14010
33308
45007
26019
180980
1895
5254
847
7397
3892
8358
27643
0
0
0
0
0
0
0
28282
41503
14857
40705
48899
34377
208623
0
0
0
0
0
0
0
28282
41503
14857
4070
48899
34377
208623
M140100
M140200
Total
Grand
Total
Kanhhangad
Kasaragode
(XIV)
(I-XIV)
39072
21615
60687
1293540
3280
3225
6505
365617
1503
0
1503
9802
43855
24840
68695
1668959
0
0
0
15217
43855
24840
68695
1653742
(XIII)
Kannur
46
47
48
49
50
51
(XIV)
Kasaragode
52
53
Page 61
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2010-11 FOR DEVELOPMENT EXPENDITURE
Provision to Corporations
No.
(1)
1
2
3
4
5
Code
(2)
C010100
C020100
C070100
C080100
C110100
Corporation
General
Sector
(3)
Thiruvanthapuram
Kollam
Kochi
Thirssur
Kozhikode
Total
(4)
325533
160359
239011
127821
179303
1032027
SCP
(5)
131740
54361
39893
47872
37280
311146
TSP
Total
(6)
0
0
0
0
0
0
(7)
457273
214720
278904
175693
216583
1343173
(Rs. In thousands)
Amount
deducted
Net
from 2010 Allocation
11
(7-8)
allocation
(8)
(9)
457273
0
28163
190766
23954
278904
0
165901
9792
196411
20172
1289255
53918
Page 62
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Annexure 2.3
2010 -11 - Plan Grants
(Amount in Rs.)
Demand No. 25.0 Welfare of Scheduled Castes/Scheduled Tribes and Other Backward Classes
Major, Sub Major Head 2225 - WELFARE OF SC/ST AND OTHER BACKWARD CLASSES
01 - WELFARE OF SCHEDULED CASTES
Minor,Sub, Detailed Heads
1
Plan
92 Rehabilitation Housing
Programme For Houseless
And Landless Scheduled
Caste Families In Kerala
(District Plan)
91 Rehabilitation Of
Puromboke Dwellers
800 Other Expenditure
80 Assistance for
marriage and major
treatment for poor
scs (district plan)
67 Providing better
education facilities
for bright sc students
66 Development of
Dependants of sc
Who were engaged in
unclean occupation in the
past (50% css)
Village
Block
District
Panchayats Panchayats Panchayats
198
197
196
2
3
4
Municipalities
192
5
Corporations
191
6
Total
7
0
0
0
0
0
0
0
0
0
0
0
0
1000000
800000
200000
2000000
65 Development
programme
for
vulnerable groups
Among sc
63 Intensive habitat
Development
Programme
Page 63
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(Amount in Rs.)
Minor, Sub, Detailed Heads
1
Block
District
Village
198
197
196
2
3
4
Municipalities
192
5
Corporations
191
6
Total
7
Plan
60 Repair and maintenance of
community hall
57 Pooled fund for scp
56 Jawahar rozgar yozana (scp)

(css 80% c.a)
54 IRDP (scp) (css 50% ca)
53 Trysem (scp) (css 50% ca)

50 Indira Awas Yojana (scp)
(css 80% c.a)
49 Million well scheme (scp)
(css 80% c.a)
0
0
0
0
0
0
0
0
0
0
0
0
48 SGSY-SCP (25% state share)
4380000
43800000
47 GRY-SCP (25% state share)
46 IAY-SCP (25% state share)
0 357800000
357800000
5000000 405800000
100000
5950000
2350000
420100000
Total 01
Page 64
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(Amount in Rs.)
1
Block
District
Village
198
197
196
2
3
4
Municipalities
192
5
Corporations
191
6
Total
7
Plan
Education
98 Post Matriculation
Studies
1700000
650000
150000
2500000
2500000
2500000
1000000
6000000
5000000
2000000
1000000
8000000
92 Boarding Grant
88 Tutorial System in
Prematric Hostels
79 Pre-primary
Education to SC
children
76 Maintenance of
hostels
283 Housing
94 Improvement of
housing facilities in
environment and
house sites
including raising
and strengthening
of the base in water
logged areas
(district plan)
93 Financial
assistance to SC for
construction of
houses (grant)
(district plan)
Page 65
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(Amount in Rs.)
1
Block
District
Village
198
197
196
2
3
4
Municipalities
192
5
Corporations
191
6
Total
7
Plan
54
Million Well Scheme (TSP)

(CSS 80% CA)
48 SGSY-TSP (25% STATE
SHARE)
47 SGRY-TSP (25% STATE
SHARE)
46 IAY-TSP (25% STATE
SHARE)
0
0
0
0
Total - 02
Total 2225 Plan
0
46300000
0
55000000
46300000
55000000
0 101300000
101300000
5000000 507100000
100000
5950000
2350000
521400000
Page 66
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Annexure 2.4
(Amount in Rs.)
Demand No. 17.0 EDUCATION, SPOARTS, ARTS AND CULTURE

Major, Sub Major Head
2202 - GENERAL EDUCATION

02 - SECONDRY EDUCATION
Minor, Sub, Detailed

Heads
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
Non Plan
107 SCHOLARSHIPS
99 Scholarships
98 National
Scholarships At The
Secondary Stage For
Talented Childern From
Rural Areas
109 Government
Secondary Schools
99 Secondary Schools
5 Office Expenses
5 Office Expenses
6 Rent, Rates and Taxes
17 Minor Works
18 Maintenance
Total 02
Total 2202 Non Plan
19500000
5300000
1750000
26550000
1500000
200000
200000
1900000
21000000
5500000
1950000
28450000
885128000
514453000
26247000
54872000
1716880000
Page 67
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(Amount in Rs.)
Demand No. 18.0 MEDICAL AND PUBLIC HEALTH
Major, Sub Major Head 2210 - MEDICAL AND PUBLIC HEALTH
02 - URBAN HEALTH SERVICES OTHER SYSTEM OF MEDICINE
Minor, Sub,
Detailed Heads
1
Non Plan
101 AYURVEDA
97 OTHER
HOSPITALS AND
DISPENSARIES
1 Water Charges
2 Electricity Charges
3 Telephone Charges
4 Other Items
18 Maintenance
21 Motor Vehicles
24 Materials and
Suppliers
34 Other Charges
45 P.O.L
87 BUILDING MINOR
WORKS
17 Minor Works
102 HOMOEOPATHY
99 HOSPITALS AND
DISPENSARIES
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
19500000
5300000
1750000
26550000
1500000
200000
200000
1900000
12705000
294000
6988000
3990000
282000
24259000
Page 68
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(Amount in Rs.)
Demand No. 18.0 MEDICAL AND PUBLIC HEALTH

Minor, Sub,
Detailed Heads
1
2210 - MEDICAL AND PUBLIC HEALT

03 - RURAL HEALTH SERVICES - ALLOPATHY
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
Non Plan
0
2 Electricity Charges
3 Telephone Charges
4 Other Items
18 Maintenance
19 Machinery and
Equipment
6990000
9990000
790000
17770000
7000000
10000000
800000
17800000
1 Water Charges
24 Materials and
Suppliers
34 Other Charges
45 P.O.L
Total 03
Page 69
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ESTIMATES PF ASSISTANCE TO PANCHAYAT RAJ/NAGRAPALIKA INSTITUTIONS FOR 2010 - 11
(Amount in Rs.)
Demand No. 25.0 Welfare of Scheduled Castes/ Scheduled Tribes and Other backward Classes
2225 - Welfare of SC/ST AND OTHER BACKWARD CLASSES


Heads
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
Non Plan
277 EDUCATION
97 Adult Education
726000
726000
96 Supply Of Clothes
1100000
198000
1000
1299000
94 Pre Matric Hostels
1 Salaries
2 Wages
34 Other Charges
17640000
4829000
1000
22470000
91 NURSERY
SCHOOLS
880000
73000
1000
954000
14000
14000
1000
2000
1000
4000
96 THATCHING
GRANT
979000
297000
120000
1396000
95 TILING GRANT
278000
121000
50000
449000
34 Others Charges
283 HOUSING
99 COLONISATION
34 Other Charges
98 HOUSING GRANT
Page 70
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(Amount in Rs.)


Heads
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
Non Plan
800 Other Expenditure

96 Wells And Water
Supply
94 Discretionary Grants
90 Students apperaing
for interviews and
examinations travel
expenses
Total 01
167000
70000
35000
272000
40000
40000
220000
165000
66000
451000
2578000
18741000
5755000
1001000
28075000
Page 71
th
(Amount in Rs.)

03 - WELFARE OF BACKWARD CLASSES

Heads
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
Non Plan
277 Education
97 Boarding Grants
Total 03
Total 2225 Non Plan
44000
1000
1000
46000
44000
5755000
1000
46000
6053000
18741000
44000
5756000
10002000
31596000
Page 72
th
Amount in Rs.)
Demand No. 17.0 EDUCATION, SPOARTS, ARTS AND CULTURE

2202 - GENERAL EDUCATION

01 - SECONDRY EDUCATION

Heads
Village
Panchayats
198
Block
Panchayats
197
District
Panchayats
196
Municipalities
192
Corporations
191
Total
Non Plan
90 Furniture for
departmental upper
primary school
89 Purchase of furniture
for departmental
primary school
20000000
16500000
1900000
1135000
39535000
865128000
476953000
255027000
51787000
1648895000
885128000
493453000
256927000
52922000
1688430000
109 Scholarships and

incentives
99 Scholarships to
pupils of primary school
800 Other expenditure
98 Mid- day meals to
primary school pupils
89 Free supply of
writing aids and text
books to primary school
students
Total 01
Page 73
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Annexure 2.5
Details of Distribution of Development Funds to Local Self Government Institutions
District-wise in 2010-11
Page 74
th
Annexure 2.6
Details of Flow of Funds to Agartala Municipal Council and 15 Nagar
Panchayats in Tripura during 2010-2011
Page 75
th
Page 76
th
Page 77
th
Page 78
th
Page 79
th
Page 80
th
Page 81
th
Page 82
th
Page 83
th
Page 84
th
Page 85
th
Page 86
th
Annexure 3.1
The C&AGs letter to Honble speakers of state legislatures along with Office
Memorandum of the Ministry of Urban Development requesting the state
governments to take necessary action
Page 87
th
Page 88
th
No. N-11025/56/2007-UCD
Government of India
Ministry of Urban Development
New Delhi,
Dated: November 7, 2008
OFFICE MEMORANDUM
1
The undersigned is directed to state that the Group of Ministers (GoM) met on September 3,
2008to consider the recommendations contained in the Sixth Report of the Second
Administrative Reforms Commission (ARC), titled Local Governance An Inspiring Journey into
the Future. A number of recommendations made in the report have been accepted by the
Government and, therefore, action needs to be taken on those recommendations.
2.
While most of the recommendations relating to urban governance and urban local bodies are
required to be implemented at the State level, some recommendations are required to be taken up by
the Central Ministries. One such recommendation is given below in which the GoM has advised that
the matter would be taken up by M/o Urban Development and M/o Panchayati Raj with the State
Governments and C&AG.
Recommendation
Decision of GoM
13. (Para 3.9.22) Accounting and Audit
(a to e) Accepted. MoPR and MoUD

would take up the matter with the
State Governments and C&AG as
appropriate.
a. The accounting system for the urban local bodies

(ULBs) as provided in the National Municipal Accounts
Manual (NMAM) should be adopted by the State
Governments. (65)
b. The financial statements and balance sheet of the
urban local bodes should be audited by an Auditor in the
manner prescribed for audit of Government Companies
under the Companies Act, 1956 with the difference that in
the case of audit of these local bodies, the C&AG should
prescribe guidelines for empanelment of the Chartered
Accountants and the selection can be made by the State
Governments within these guidelines. The audit to be
done by the Local Fund Audit or the C&AG in discharge
of their responsibilities would be in addition to such an
audit. (66)
c. The existing arrangement between the Comptroller &
Auditor General of India and the State Governments with
regard to providing Technical Guidance and Supervision
(TGS) over maintenance of accounts and audit PRIs and
ULBs should be institutionalized by making provisions in
the State Laws governing local bodies. (67)
d. It should be ensured that the audit and accounting
standards and formats for Panchayats are prepared in a
way which is simple and comprehensible to the elected
representatives of the PRIs (68)
e. The independence of the Director, Local Fund Audit
(DLFA) or any other agency responsible for audit of
accounts of local bodies should be institutionalized by
making the office independent of the State administration
The head of this body should be appointed by the State
Government from panel vetted by the C& AG. (69)
Page 89
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f. Release of Finance Commission

bodies may be made conditional
arrangements regarding technical
C&AG over audit of accounts of local
Grants to the local

on acceptance of
supervision of the
bodies. (70)
g. Audit reports on local bodies should be placed before

the State Legislature and these reports should be
discussed by a separate committee of the State
Legislature on the same lines ad the Public Accounts
Committee (PAC). (71)
(f) Not accepted
(g to k): Accepted. MoPR and MoUD

would take up the matter with the
State Governments and C&AG as
appropriate.
h. Access to relevant information/records to DLFA/

designated authority for conducting audit or the C&AG
should be ensured by incorporating suitable provisions in
the State Laws governing local bodies. (72)
i. Each State may ensure that the local bodies have
adequate capacity to match with the standards of
accounting and auditing. (73)
j. The system of outcome auditing should be gradually
introduced. For this purpose the key indicators of
performance in respect of a government scheme will
need to be decided and announced in advance. (74)
k.
To complement institutional audit arrangements,
adoption
and
monitoring
of prudent
financial
management practices in the local bodies should be
institutinalised by the State Governments by legislating
an appropriate law on Fiscal Responsibility for local
Bodies. (75)
3.
The office of C&AG is requested to take necessary action in the matter in consultation with
this Ministry. The above recommendations are also being forwarded to the State Government for
taking necessary action immediately.
(R. Sathyanarayanan)
Under Secretary to the Govt. of India
Tele: 23061072
The Office of C&AG of India
[Kind Attn: Principal Director (LB)]
10, Bahadur Shah Zafar Marg
NEW DELHI 110 002.
Page 90
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Annexure 3.2
Extract of the relevant provisions relating to entrusting the audit of local of bodies and
TG&S to the Comptroller and Auditor General of India under the C&AGs (Duties, Powers,
and Conditions of Service) Act, 1971.
Audit of receipts and expenditure of bodies or authorities substantially financed from
Union or State Revenues
14.(1) Where anybody or authority is substantially financed by grants or loans from the
Consolidated Fund of India or of any State or of any Union territory having a Legislative
Assembly, the Comptroller and Auditor-General shall, subject to the provisions of any law
for the time being in, force applicable to the body or authority, as the case may be, audit all
receipts and expenditure of that body or authority and to report on the receipts and
expenditure audited by him.
Explanation: Where the grant or loan to a body or authority from the Consolidated Fund of
India or of any State or of any Union territory having a Legislative Assembly in a financial
year is not less than rupees twenty-five lakhs and the amount of such grant or loan is not
less than seventy-five percent of the total expenditure of that body or authority, such body
or authority shall be, deemed, for the purposes of this sub-section, to be substantially
financed by such grants or loans as the case may be.
(2) Notwithstanding anything contained in sub-section (1) the Comptroller and AuditorGeneral may with the previous approval of the President or the Governor of a State or the
Administrator of a Union territory having a Legislative Assembly, as the case may be, audit
all receipts and expenditure of any body or authority where the grants or loans to such body
or authority from the Consolidated Fund of India or of any State or of any Union territory
having a Legislative Assembly, as the case may be in a financial year is not less than rupees
one crore.
(3) Where the receipts and expenditure of any body or authority are by virtue of the
fulfillment of the, conditions specified in sub-section (1) or sub-section (2) audited by the
Comptroller and Auditor-General in a financial year, he shall continue to audit the receipts
and expenditure of that body or authority for a further period of two years notwithstanding
that the conditions specified in sub-section (1) or sub-section (2) are not fulfilled during any
of the two subsequent years.
Audit of Government companies and corporations
19. (1) The duties and powers of the Comptroller and Auditor-General in relation to the
audit of the accounts of Government companies shall be performed and exercised by him
in accordance with the provisions of the Companies Act, 1956 (1 of 1956).
(2) The duties and powers of the Comptroller and Auditor-General in relation to the audit
of the accounts of corporations (not being companies) established by or under law made
by Parliament shall be performed and exercised by him in accordance with the provisions
of the respective legislations.
Page 91
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(3) The Governor of a State or the Administrator of a Union territory having a Legislative
Assembly may, where he is of opinion that it is necessary in the public interest so to do,
request the Comptroller and Auditor-General to audit the accounts of a corporation
established by law made by the Legislature of the State or of the Union territory, as the
case may be, and where such request has been made, the Comptroller and AuditorGeneral shall audit the accounts of such corporation and shall have, for the purposes of
such audit, right of access to the books and accounts of such corporation:
Provided that no such request shall be made except after consultation with the
Comptroller, and Auditor-General and except after giving reasonable opportunity to the
corporation to make representations with regard to the proposal for such audit.
Laying of reports in relation to accounts of Government companies and
corporation
19A. (1) The reports of the Comptroller and Auditor-General, in relation to audit of
accounts of a Government company or a corporation referred to in section 19, shall be
submitted to the Government or Governments concerned.
(2) The Central Government shall cause every report received by it under sub-section
(1) to be laid, as soon as may be after it is received, before each House of Parliament
(3) The State Government shall cause every report received by it under sub-section (1)
to be laid, as soon as may be after it is received, before the Legislature of the State.
Explanation : For the purposes of this section "Government or "State Government" in
relation to a Union Territory having a Legislative Assembly, means the Administrator of
the Union territory.
Audit of accounts of certain authorities or bodies

20. (1) Save as otherwise provided in section 19, where the audit of the accounts of any
body or authority has not been entrusted to the Comptroller and Auditor-General by or
under any law made by Parliament, he shall, if requested so to do by the President, or the
Governor of a State or the Administrator of a Union territory having a Legislative Assembly,
as the case may be, undertake the audit of the accounts of such body or authority on such
terms and conditions as may be agreed upon between him and the concerned Government
and shall have, for the purposes of such audit, right of access to the books and accounts of
that body or authority:
Provided that no such request shall be made except after consultation with the Comptroller
and Auditor-General.
(2) The Comptroller and Auditor-General may propose to the President or the Governor of a
State or the Administrator of a Union territory having a Legislative Assembly, as the case
may be, that he may authorised to undertake the audit of accounts of any body or authority,
the audit of the account of which has not been entrusted to him by law, if he is of opinion
that such audit is necessary because a substantial amount has been invested in, or advanced
to, such body or authority by the Central or State Government or by the Government of a
Union territory having a Legislative Assembly, and on such request being made, the
President or the Governor or, the Administrator, as the case may be, may empower the
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Comptroller and Auditor-General to undertake the audit of the accounts of such body or
authority.
(3) The audit referred to in sub-section (1) or sub-section (2) shall not be entrusted to the
Comptroller and Auditor-General except where the President or the Governor of a State or
the Administrator of a Union territory having a Legislative Assembly, as the case may be, is
satisfied that it is expedient so to do in the public-interest and except after giving a
reasonable opportunity to the concerned body or authority to make representations with
regard to the proposal for such audit.
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Annexure 4.1
A Copy of the provisions relating to Ombudsmans in Kerala Panchayat Raj Act, 1994 .
CHAPTER XXV B
OMBUDSMAN FOR LOCAL SELF GOVENRMENT INSTIUTIONS
271 F. Definitions. (1) For the purpose of this Chapter, (a) action means action taken by way of decision, recommendation, resolution or finding or
in execution thereof or in exercise of administrative or legal functions in any other manner
and includes willful default in taking action or omission and all other expressions connoting
such action shall be construed accordingly;
(b) allegation, (a) in relation to a public servant means, any affirmation that such public servant, (i) has abused his position as such for any gain or favour to himself or to any other person or
to cause undue harm or hardship to any other person;
(ii) was actuated in the discharge of his functions as such public servant by personal interest
or improper or corrupt motives;
(iv) is guilty of any action as public servant which facilitates or causes to make any loss,
waste or misapplication of money or other property of the Local Self Government
Institution.
(b) In relation to a Local Self Government Institution means any affirmation that such Local
Self Government Institution has defaulted or acted in excess of its powers in the discharge
of its functions imposed on it by law or in implementing the lawful orders and directions of
the Government;
(c) Complaint means a statement of allegation that a public servant or a Local Self
Government Institution is guilty of corruption or maladministration and includes any
reference to an allegation in respect of which suo moto enquiry has been proposed or
recommendation for enquiry has been made by Government;
(d) Corruption includes anything publishable under Chapter X of the Indian Penal Code
(Central Act 45 of 1860) or under the Prevention of Corruption Act, 1988 (Central Act 49
1988);
(e) Maladministration means action taken or purporting to have been taken in the exercise
of administrative function in any case, (i) Where such action, administrative procedure or practice governing such auction is
unreasonable, unjust, oppressive, discriminatory or nepotic and will make illegitimate, gain
or loss or will deny deserving benefits; or
(ii) Where there is willful negligence or delay in taking such action, or the administrative
procedure or method regulating such action will cause undue delay and includes the action
leading to loss or waste or misuse of fund by mal-feasance or misfeasance.
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(f) Ombudsman means the ombudsman 211[referred to in section] 271 G;

(g) Public Servant means an employee, or officer under the Local Self Government
Institution or an elected member of the Local Self Government Institution including its
President or Chairperson and includes an employee or officer of any office or institution
transferred to the Local Self Government Institution under the Provisions of this Act;
(h) Secretary means the Secretary of the Ombudsman 212[referred to in section] 271 G;
(i) investigating officer means an officer authorised by the Ombudsman to conduct
[271 G. Term of office and conditions of Service of Ombudsman.
(1) There shall be an authority for Local Self Government Institutions, at State Level
known as Ombudsman for making investigations and enquiries, in respect of charges on
any action involving corruption or maladministration or irregularities in the discharge of
administrative functions, in accordance with the provisions of this Act by Local Self
Government Institutions and Public Servants working under them and for the disposal of
such complaint in accordance with Section 271 Q.
(2) The Governor shall, on the advice of the Chief Minister, appoint a person who has
held the post of a Judge of the High Court as Ombudsman.
(3) A person appointed to be the Ombudsman shall, before he enter upon his office, make
and subscribe before the Governor or some person appointed in that behalf by him, an oath
or affirmation according to the form set out below: I,A.B. having been appointed as the Ombudsman for Local Self Government Institutions
under the Kerala Panchayat Raj Act, 1994, do swear in the name of God/Solemnly affirm
that I will bear true faith and allegiance to the Constitution of India and I will duly and
faithfully and to the best of my ability, knowledge and judgment perform the duties of
my office without fear or favour, affection or ill-will.
(4) A person appointed as Ombudsman shall hold office for a term of three years from the
date on which he enters upon his office:
Provided that, (a) the Ombudsman may, by writing under this hand addressed to the Governor, resign
his office; and
(b) the person appointed as Ombudsman may be removed from his office in the manner
provided in Section 271 H.
(5) The person appointed as Ombudsman shall be entitled for salary and allowances as
are admissible to a Judge of the High Court of Kerala.
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(6) On expiry of his term of office as Ombudsman, he shall not be eligible for reappointment
as Ombudsman or for further appointment to any office of profit under the Government of
Kerala or in any corporation, company, society or university by or under the control of the
Government of Kerala.]
[271 H. Removal of Ombudsman. - (1) The Ombudsman shall not be removed from his
office, except by an order of the Governor, passed after an address by the State Legislative
Assembly, supported by a majority of the total membership of the House and
by a majority of not less than two-thirds of the members of the Legislative Assembly present
and voting, has been presented to the Governor in the same session for such removal, on
the ground of proved misbehaviour or incapacity.
(2) The procedure for the presentation of an address under sub-section (1) and for the
investigation and proof of the misbehaviour or incapacity of the Ombudsman shall be in
accordance with the provisions of law made by the Legislative Assembly.]
271 I. Staff of the Ombudsman. - (1) The Ombudsman shall have a Secretary, and such
other officers and employees as the Government may determine in consultation with the
Ombudsman to assist the Ombudsman in the exercise of its powers and discharge of its
functions under this Act.
(2) The appointment and conditions of service of the Secretary and the employees shall
be such as may be specified by the Government and as far as possible appointment on
deputation from Government Department shall be resorted to.
(3) The Ombudsman may require the assistance of any Officer of any Government
Department in order to ascertain the veracity of an allegation under investigation and
such officer shall be bound to render such assistance in addition and without detriment, to
his official duties.
(4) The Ombudsman may utilise the services of any person having experience and
expertise in any particular subject in deciding the questions before it.
271 J. Functions of the Ombudsman. - (1) The Ombudsman shall perform all or any of
the following functions, namely: (i) Investigate into any allegation contained in a complaint or on a reference from
(ii) Enquire into any complaint in which corruption or maladministration of a public
servant or a Local Self Government Institution is alleged;
(iii) Pass an order on the allegation in the following manner, namely: (a) Where the irregularity involves a criminal offence committed by a public servant, the
mater shall be referred to the appropriate authority for investigation.
(b) Where the irregularity causes loss or inconvenience to a citizen, direct the Local Self
Government Institution to give him compensation and to reimburse the loss from the
person responsible for the irregularity;
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(c) Where the irregularity involves loss or waste or misuse of the fund of the Local Self
Government Institution, realise such loss from those who are responsible for such
irregularity, and
(d) Where the irregularity is due to omission or inaction cause to supply the omission and to
rectify the mistake.
(2) In addition to the functions enumerated in sub-section (1), the Ombudsman may pass
interim order restraining the Local Self Government Institution from doing anything
detrimental to the interest of the complainant if it is satisfied that much loss or injury will be
caused to the complainant due to the alleged act.
(3) The Ombudsman may by order, impose penalty in addition to compensation if it is of
opinion that the irregularity involves corrupt practice for personal gain.
271 K. Powers of the Ombudsman. (1) The Ombudsman shall, for the purpose of any
investigation or enquiry under this Act, have the same powers as are vested in a Civil
Court while trying a suit under the Code of Civil Procedure, 1908 (Central Act V of
1908) in respect of the following matters, namely: (a) summoning and enforcing the attendance of any witness and examining him;
(b) requiring the discovery and production of any document;
(c) receiving evidence on affidavits;
(d) requisitioning any public records, or copy thereof from any Court or Office;
(e) issuing commissions for the examination of witness;
(f) such other powers as are prescribed;
(2) Where the Ombudsman finds that the allegation contained in a complaint is without
any substance or trivial in nature it may by order direct the complainant to pay to the
opposite party so much of the amount specified in the order by way of cost.
(3) Where the allegation contained in a complaint is about the loss or waste or
misapplication of the fund of the Local Self Government Institution or in respect of the
loss or inconvenience caused to a citizen, the Ombudsman may, during enquiry, collect
evidence, determine the loss and direct in its order the amount to be realised from the
person responsible.
(4) If the amount paid as per the order passed by the Ombudsman under sub-section (2)
or sub-section (3) is not paid within the period specified by it, the same shall be
recoverable by Revenue Recovery Proceedings as if it were an arrears of land revenue.
271L. Service of Government Departments. - The Government may, at the request of the
Ombudsman make available the services of officers and employee of the Government
including police personnel to assist the Ombudsman in the conduct of investigation and
enquiry and in respect of such functions such Officer or employee shall be deemed to be the
officer or employee of the Ombudsman.
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271M. Investigation. - (1) The Ombudsman may, according to the provisions of this Act,
enquire into any complaint filed before it under this Act.
(2) Notwithstanding anything contained in this Act the Government may refer any allegation
of corruption or maladministration against a Local Self Government Institution or a public
servant which is within its knowledge or brought to its notice, to the Ombudsman and the
Ombudsman shall enquire into it as if it was a complaint filed under this Act.
(3) The Ombudsman may, on receipt of a complaint, conduct an investigation in the matter
and where there is prima facie case it may conduct a detailed enquiry.
(4) The Ombudsman shall not enquire into matters relating to, (a) any matter in respect of which a formal and public enquiry has been ordered by
Government;
(b) any matter in respect of which a remedy is available from the Tribunal for Local Self
Government Institutions constituted under Section 271S;
(c) any matter in respect of which an enquiry has been ordered under the Commission of
Inquiries Act, 1952 (Central Act 60 of 1952) or any matter pending before a court;
(d) any complaint filed after the expiry of three years from the date on which the matter
complain against have taken place:
Provided that the Ombudsman may entertain such complaint if the complainant satisfies
that he had sufficient reason for not filing the complaint within the specified period.
271 N. Enquiry. - (1) After an investigation if the Ombudsman is satisfied that, (a) the complaint is frivolous or vexatious or is not made in good faith; or
(c) other remedies are available to the complainant and it would be more beneficial for the
complainant to avail of such remedies in view of the circumstances of the case, it may
dispose of the complaint as rejected after recording its findings stating the reason therefore,
and communicate the same to the complainant.
Local Self Government Institution complained of it shall record its findings to this effect and
send notices of the proposed enquiry to the complainant and to the opposite party.
(3) The Ombudsman shall, subject to the provisions of this Act and the rules made there
under, have power to regulate its procedures by fixing the time and place of sitting.
215[(4) (5) xxxx]
represent any person, unless the Ombudsman permits, by an order, a person to be
represented by a legal practitioner for reasons to be recorded.
271 O. Existing cases to be transferred to Ombudsman. - (1) Notwithstanding anything
contained in the Kerala Lok-Ayukta Act, 1999 (8 of 1999) or any other law, if any
proceedings, filed and not disposed of under the said Act, before the constitution of
Ombudsman as per the provisions of this chapter, relate to a public servant or Local Self
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Government Institution as per the provisions of this Act, all cases with regard to such
proceedings shall be transferred to the Ombudsman and the Ombudsman shall decide the
cases in accordance with the provisions of this Act.
(2) All cases, with regard to the loss, wastage and misappropriation of any land of the Local
Self Government Institution, pending before the Government or any other authority and
disposed of just before the constitution of Ombudsman and the Ombudsman shall dispose
of the cases in accordance with the provisions of this Act.
(3) No complaint, against a public servant as defined in this chapter, shall be entertained by
a Lok-Ayukta or Up Lok-Ayukta constituted as per the Kerala Lok-Ayukta Act, 1999 (8 of
1999) on or after the date of the constitution of Ombudsman as per the provisions of this
chapter.
271 P. Initiation of prosecution. - (1) If, after an investigation or inquiry, the Ombudsman
finds that there is a prima-facie case against the accused involving a criminal offence, the
Ombudsman may refer the complaint and the findings to a competent authority with
recommendation to initiate prosecution.
(2) The authority responsible, for initiating such prosecution shall conduct a detailed
enquiry if necessary and charge a case.
271 Q. Disposal of complaints. - (1) The Ombudsman may consider and dispose of
complaints other than those involving criminal offences, in the following manner, (i) award of compensation, to a citizen in case of loss or grievance;
(ii) Order the recovery of loss caused to the Local Self Government Institution from the
person responsible;
(iv) Order the recovery of loss from the accused failing which, order realisation through
Revenue Recovery Proceedings;
(v) Order other necessary remedial measures considering the facts and circumstances of
the case.
(2) Where the Ombudsman finds that the procedure or practice regarding the
administration of Local Self Government Institution gives room for complaint, it may
give suggestions to the Government or Local Self Government Institutions relating to the
measures for avoiding the recurrence of such complaint.
(3) The Ombudsman shall give annually a detailed report regarding the performance of
its functions under this Act to the Government and the Government it shall lay it before
the Legislative Assembly with an explanatory memorandum.
271 R. Procedures to be prescribed. - The Government may make rules in respect of the
following matters, namely: (i) The conditions of service of216[the person of the Ombudsman and Ombudsmans]staff;
(ii) The manner of filing complaints before the Ombudsman and the manner or filling cases
either suo moto or on reference by State Government
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(v) Procedure to be followed during the inquiry, which as far as possible be summary
proceedings;
(vi) The manner of implementing the order of the Ombudsman and further proceedings;
(vii) The form for filing complaints to Ombudsman;
(viii) Any other matter which the Government may deem necessary to prescribe.
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Annexure 4.2
A copy of the provisions relating to Ombudsman in Model Municipal Law
Specimen Municipal Law for Municipalities in India
Towards Framing New State Specific Municipal Laws
for Implementation in Totality of
The Provisions of the Constitution (Seventy Fourth Amendment) Act, 1992 and The New
Compulsions for Urban Management Reforms
Volume I
Consultant
The Times Research Foundation
Kolkata
Prepared for
Ministry of Urban Development and
Poverty Alleviation
Government of India
Sponsored by
INDO USAID FINNACIAL REFORMS AND
EXPANSION (FIRE) PROJECT
August, 2002
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G Municipal Ombudsman
Appointment and
47.
tenure of
Ombudsman
Municipal Ombudsman
section 48.
(1) The State Government may, on the recommendation of a

appoint one more persons to be known as Municipal
to carry out the functions entrusted to him under
(2) The Selection Committee referred to in sub section (1)

shall consist of
(a)The Chief Secretary to the State Government,
(b) A member of the State Public Service Commission,
nominated by the Chairman of said Commission, and
(c) A person of repute having not less than twenty years
experience in administration..
(3) The minimum age of a person for appointment as
Municipal Ombudsman shall be fifty five years.
(4) The appointment of a Municipal Ombudsman may be made
for a period not exceeding three years:
Provided that the period of appointment of a Municipal Ombudsman may, subject to the
recommendation of the Section Committee referred to in sub-section (1), be extended for a
further period not exceeding two years, subject to the age-limit of sixty-five years.
(5) A Municipal Ombudsman shall devote his whole time to the affairs of his office:
Provided that the State Government may, if , in its opinion, it is considered necessary so to
do, permit the Municipal Ombudsman to undertake such part-time honorary work as is not
likely to interfere with his duties under this Act.
(6) Where the State Government is satisfied that in the public interest or for reason of
incapacity of a Municipal Ombudsman, it is necessary so to do, it may, for reasons to be
recorded in writing, and by giving him three months notice or by paying him three months
consolidated emoluments in lieu of the notice aforesaid, remove him from his office.
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Function and power 48. The Municipal Ombudsman shall have the following functions of
Municipal Ombudsman
and Powers:a) to receive complaints from any person relating to the
provision of municipal services;
b) to consider the complaints as aforesaid and to facilitate
their satisfaction or settlement by agreement through
conciliation and mediation between a Municipal and the
aggrieved person by passing an award in this behalf in the
manner prescribed and
c) to resolve, by way of arbitration, such disputes
between Municipalities or between a Municipality and its
citizens as may be agreed upon by the contesting parties in
accordance with the provisions of the Arbitration and
Conciliation Act, 1996.
Territorial
Jurisdiction
49. (1) The State Government shall specify the territorial limits to
which the authority of a Municipal Ombudsman shall extend.
(2) (a) The office of the Municipal shall be located at such places as may be specified by
the State Government.
(b) A Municipal Ombudsman may, for expeditious disposal of complaints or conduct of
arbitral proceedings, hold sittings at such places within the area of his jurisdiction as he
may consider necessary.
Qualifications, 50. (1)

remuneration,
A Municipal Ombudsman shall be a person of repute and
shall have experience in civil services or public or municipal
administration or management sector, and if such person is a civil servant, he shall be

not below the rank of a Secretary to the State Government or a District Judge having
jurisdiction in the State.
(2)
The remuneration and other perquisites payable to a

Municipal Ombudsman shall be such as may be determined by
the State Government from time to time.
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Review
51.
(3)
A Municipal Ombudsman shall be provided with an office with

necessary complement of officers and other staff.
(4)
A Municipal Ombudsman shall exercise general powers of

superintendence and control over his office and shall be
responsible for the conduct of business thereof.
(5)
A Municipal Ombudsman shall prepare an annual budget for

his office in consultation with the State Government and shall
have the power to incur expenditure for his office from the
allotment provided in the budget.
The State Government may set up, on such terms and conditions as
Authority
it may determine in consultation with the High Court, a
Review Authority consisting of a person who is or has been a judge of
the High Court before whom an aggrieved party may file an appeal for
review of any order or decision of a Municipal Ombudsman.
Publicity.
52.
The State Government and the Municipality
shall give adequate publicity to the appointment of a Municipal
Ombudsman under this Act for the information of the public.
Power to
make rules
53.
The State Government may make rules, inter alia, for the following
matters : (a) grounds and procedure for filing of complaints;
(b) procedure for redressal of grievances;
(c) settlement of complaint by agreement;
(d) award by a Municipal Ombudsman
(e) rejection of complaint;
(f) proceedings before the Review Authority;
(g) powers of a Municipal Ombudsman and procedure of
functioning as an Arbitrator and notification and enforcement of
an award; and
(h) any other matter which is, or may be, required to be provided by
rules.
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Annexure 4.3
A copy of relevant provisions to Ombudsman for Panchayats of Model Panchayat Raj
legislation.
Chapter XVII
Ombudsman for Panchayats
253. Definitions. (1) For the purpose of this Chapter, (a) Àction means action taken by way of decision, recommendation, resolution or finding or in
execution thereof or in exercise of administrative or legal functions in any other manner and
includes wilful default in taking action or omission and all other expressions connoting such action
shall be construed accordingly;
(b) Àllegation, (a) in relation to a public servant means, any affirmation that such public servant, (i) has abused his position as such for any gain or favour to himself or to any other person or to
cause undue harm or hardship to any other person;
(ii) was actuated in the discharge of his functions as such public servant by personal interest or
improper or corrupt motives;
(iv) is guilty of any action as public servant which facilitates or causes to make any loss, waste or
misapplication of money or other property of the Panchayat.
(b) In relation to Panchayat means any affirmation that such Panchayat has defaulted or acted in
excess of its powers in the discharge of its functions imposed on it by law or in implementing the
lawful orders and directions of the State Government;
(c)`Complaint means a statement of allegation that a public servant or a Panchayat is guilty of
corruption or maladministration and includes any reference to an allegation in respect of which
suo moto enquiry has been proposed or recommendation for enquiry has been made by State
Government;
(d) `Corruption includes anything publishable under Chapter X of the Indian Penal Code (Central
Act 45 of 1860) or under the Prevention of Corruption Act, 1988 (Central Act 49 1988);
(f) `Maladministration means action taken or purporting to have been taken in the exercise of
administrative function in any case, (i) Where such action, administrative procedure or practice governing such auction is
unreasonable, unjust, oppressive, discriminatory or nepotic and will result in illegitimate gain or
loss or in denying deserving benefits; or
(ii) Where there is wilful negligence or delay in taking such action, or the administrative
procedure or method regulating such action will cause undue delay and includes the action
leading to loss or waste or misuse of fund by mal-feasance or misfeasance.
(g) Òmbudsman; means the ombudsman referred to in section 254;
(h) `Public Servant means an employee, or officer under the Panchayat or an elected member of
the Panchayats including its Chairperson or Deputy Chairperson and includes an employee or
officer of any office or institution transferred to the Panchayat under the provisions of this Act;
(i) `Secretary means the Secretary of the Ombudsman referred to in section 257;
(j) Ìnvestigating Officer means an officer authorized by the Ombudsman to conduct
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254. Establishment and appointment of Ombudsman.

(1) There shall be an authority for Panchayats constituted for a group of districts known as
Òmbudsman for making investigations and enquiries, in respect of charges on any action
involving corruption or maladministration or irregularities in the discharge of administrative
functions by Panchayats and Public Servants working under them, in accordance with the
provisions of this Act and for the disposal of complaint in accordance with section 268.
(2) The Ombudsman should be a single member body appointed by a committee consisting of
the Chief Minister of the State, the Speaker of the State Legislative Assembly and the Leader of
the Opposition in the Legislative Assembly. The Ombudsman should be selected from a panel of
eminent persons of impeccable integrity and should not be a serving State Government official.
(2) A person appointed to be the Ombudsman shall, before he or she enters upon his office,
make and subscribe before the Governor or some person appointed in that behalf by him, an
oath or affirmation according to the form prescribed.
255. Term of office and conditions of Service of the Ombudsman.
(1) A person appointed as Ombudsman shall hold office for a term of three years from the date
on which he enters upon his office:
Provided that, (a) the Ombudsman may, by writing to the Governor, resign from his office; and
(b) the person appointed as Ombudsman may be removed from his office in the manner
provided in section 256.
(2) The person appointed as Ombudsman shall be entitled for salary and allowances as are
admissible to a Judge of the High Court.
(3) On expiry of his term of office as Ombudsman, he shall not be eligible for reappointment as
Ombudsman or for further appointment to any office of profit under the State Government or in
any corporation, company, society or university by or under the control of the State
Government.
256. Removal of Ombudsman.
(1) The Ombudsman shall not be removed from his office, except by an order of the Governor,
passed after an address by the State Legislative Assembly, supported by a majority of the total
membership of the House and by a majority of not less than two-thirds of the members of the
Legislative Assembly present and voting, has been presented to the Governor in the same
session for such removal, on the ground of proved misbehaviour or incapacity.
(2) The procedure for the presentation of an address under sub-section (1) and for the
investigation and proof of the misbehaviour or incapacity of the Ombudsman shall be in
accordance with the provisions of law made by the Legislative Assembly.
257. Staff of Ombudsman.
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(1) The Ombudsman shall have a Secretary, and such other officers and employees as the State
Government may determine in consultation with the Ombudsman to assist the Ombudsman in
the exercise of its powers and discharge of its functions under this Act.
(2) The appointment and conditions of service of the Secretary and the employees shall be such
as may be specified by the State Government and as far as possible appointment on deputation
from the State Government shall be resorted to.
(3) The Ombudsman may require the assistance of any officer of any State Government
Department in order to ascertain the veracity of an allegation under investigation and such
officer shall be bound to render such assistance in addition and without detriment to his official
duties.
(4) The Ombudsman may utilize the services of any person having experience and expertise in
any particular subject in deciding the questions before it.
258. Functions of the Ombudsman.
(1) The Ombudsman shall perform all or any of the following functions, namely: (i) Investigate into any allegation contained in a complaint or on a reference from State
(ii) Enquire into any complaint in which corruption or maladministration of a public servant
except Nyaya Panchas or a Panchayat is alleged;
(iii) Pas an order on the allegation in the following manner, namely: (a) Where the irregularity involves a criminal offence committed by a public servant, except
Nyaya Panchas, the matter shall be referred to the appropriate authority for investigation.
(b) Where the irregularity causes loss or inconvenience to a citizen, direct the Panchayat to give
him compensation and to reimburse the loss from the person responsible for the irregularity;
(c) Where the irregularity involves loss or waste or misuse of the fund of the Panchayat, realize
such loss from those who are responsible for such irregularity, and
(d) Where the irregularity is due to omission or inaction cause to redress the omission and to
rectify the mistake.
(2) In addition to the functions enumerated in sub-section (1), the Ombudsman may pass an
interim order restraining the Panchayat from doing anything detrimental to the interest of the
complainant if it is satisfied that much loss or injury will be caused to the complainant due to the
alleged act.
(3) The Ombudsman may by order, impose penalty in addition to compensation if it is of opinion
that the irregularity involves corrupt practice for personal gain.
259. Time limit for investigation of complaints.
A time limit may be prescribed for the Ombudsman to complete its investigations into
complaints by the State Government.
260. Powers of the Ombudsman.
(1) The Ombudsman shall, for the purpose of any investigation or enquiry under this Act, have
the same powers as are vested in a Civil Court while trying a suit under the Code of Civil
Procedure, 1908 (Central Act V of 1908) in respect of the following matters, namely: Administrative Staff College of India
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summoning and enforcing the attendance of any witness and examining him;
requiring the discovery and production of any document;
receiving evidence on affidavits;
requisitioning any public records, or copy thereof from any court or office;
issuing commissions for the examination of witnesses;
such other powers as are prescribed;
(2) Where the Ombudsman finds that the allegation contained in a complaint is without any
substance or trivial in nature it may by order direct the complainant to pay to the opposite party
so much of the amount specified in the order by way of cost.
(3) Where the allegation contained in a complaint is about the loss or waste or misapplication of
the fund of the Panchayat or in respect of the loss or inconvenience caused to a citizen, the
Ombudsman may, during enquiry, collect evidence, determine the loss and direct in its order the
amount to be realized from the person responsible.
(4) If the amount paid as per the order passed by the Ombudsman under sub-section (2) or subsection (3) is not paid within the period specified by it, the same shall be recoverable by Revenue
Recovery Proceedings as if it were an arrears of land revenue.
261. Service of State Government Departments.
The State Government may, at the request of the Ombudsman make available the services of
officers and employee of the State Government including police personnel to assist the
Ombudsman in the conduct of investigation and enquiry and in respect of such functions such
Officer or employee shall be deemed to be the officer or employee of the Ombudsman.
262. Investigation.
(1) The Ombudsman may, according to the provisions of this Act, enquire into any complaint
filed before it under this Act.
(2) Notwithstanding anything contained in this Act the State Government may refer any
allegation of corruption or maladministration against a Panchayat or a public servant which is
within its knowledge or brought to its notice, to the Ombudsman and the Ombudsman shall
enquire into it as if it was a complaint filed under this Act.
(3) The Ombudsman may, on receipt of a complaint, conduct an investigation in the matter and
where there is prima facie case it may conduct a detailed enquiry.
(4) The Ombudsman shall not enquire into matters relating to, (a) any matter in respect of which a formal and public enquiry has been ordered by State
Government;
(b) any matter in respect of which a remedy is available from the Nyaya Panchayat constituted
under section 274;
(c) any matter in respect of which an enquiry has been ordered under the Commission of
Inquiries Act, 1952 (Central Act 60 of 1952) or any matter pending before a court;
(d) any complaint filed after the expiry of three years from the date on which the matter
complained against has taken place:
Provided that the Ombudsman may entertain such complaint if the complainant satisfies that he
had sufficient reason for not filing the complaint within the specified period.
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263. Enquiry.
(1) After an investigation if the Ombudsman is satisfied that, (a) the complaint is frivolous or vexatious or is not made in good faith; or
(c) other remedies are available to the complainant and it would be more beneficial for the
complainant to avail of such remedies in view of the circumstances of the case, it may dispose of
the complaint as rejected after recording its findings stating the reason therefore, and
communicate the same to the complainant.
Panchayat complained of it shall record its findings to this effect and send notices of the
proposed enquiry to the complainant and to the opposite party.
(3) The Ombudsman shall, subject to the provisions of this Act and the rules made there under,
have power to regulate its procedures by fixing the time and place of sitting.
represent any person, unless the Ombudsman permits, by an order, a person to be represented
by a legal practitioner for reasons to be recorded.
264. Existing cases to be transferred to Ombudsman.
(1) Notwithstanding anything contained in any other law, if any proceedings, filed and not
disposed of under the said Act, before the constitution of Ombudsman as per the provisions of
this chapter, relate to a public servant or Panchayat as per the provisions of this Act, all cases
with regard to such proceedings shall be transferred to the Ombudsman and the Ombudsman
shall decide the cases in accordance with the provisions of this Act.
(2) All cases, with regard to the loss, and misappropriation of any land of the Panchayat, pending
before the State Government or any other authority and disposed of just before the constitution
of Ombudsman and the Ombudsman shall dispose of the cases in accordance with the provisions
of this Act.
265. Power to investigate and recommend action in certain cases.
The Ombudsman shall have the power to investigate and recommend action in complaints or
grievance regarding abuse of office, corruption, maladministration against the Panchayats or its
elected members, or where suspension of any resolution passed by the Panchayats or
dissolution of the Panchayats is alleged. The State Government should not have power to
suspend or rescind any resolution passed by the Panchayats or take action against the elected
representatives on the ground of abuse of office, corruption etc. or to supersede or dissolve the
Panchayats. In all such cases, Ombudsman will send his report to the Governor for further
action.
266. State Government to place records before ombudsman in certain cases.
If the State Government feels that there is need to take immediate action against the
Panchayats or their elected representatives on one or more of the grounds of abuse of office,
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corruption etc., it should place the records before the Ombudsman for urgent investigation. In
all such cases the Ombudsman will send his report to the Governor in a specific period.
267. Initiation of prosecution.
(1) If, after an investigation or inquiry, the Ombudsman finds that there is a prima-facie case
against the accused involving a criminal offence, the Ombudsman may refer the complaint and
the findings to a competent authority with recommendation to initiate prosecution.
(2) The authority responsible, for initiating such prosecution shall conduct a detailed enquiry if
necessary and charge a case.
268. Disposals of complaints.
(1) The v may consider and dispose of complaints other than those involving criminal offences, in
the following manner, (i) Award compensation t a citizen in case of loss or grievance;
(ii) Order the recovery of loss caused to the Panchayat from the person responsible;
(iv) Order the recovery of loss from the accused failing which, order realization through Revenue
Recovery Proceedings;
(v) Order other necessary remedial measures considering the facts and circumstances of the
case.
(2) Where the Ombudsman finds that the procedure or practice regarding the administration of
Panchayat gives room for complaint, it may give suggestions to the State Government or
Panchayats relating to the measures for avoiding the recurrence of such complaint.
(3) The Ombudsman shall give annually a detailed report regarding the performance of its
functions under this Act to the State Government and the State Government it shall lay it before
the Legislative Assembly with an explanatory memorandum.
269. Report to be sent to Governor.
In case of complaints and grievances regarding corruption and maladministration against the
Panchayats in general and its elected functionaries, the Ombudsman shall send its report to the
Governor.
270. Reasons for disagreement with the report to be placed in public domain.
If there is disagreement with the recommendations of the Ombudsman in case of complaints
and grievances regarding corruption and maladministration against the Panchayats in general
and its elected functionaries, the Governor must place the reasons in the public domain.
271. Procedures to be prescribed.
The State Government may make rules in respect of the following matters, namely: (i) The conditions of service of the Ombudsman and Ombudsmans staff;
(ii) The manner of filing complaints before the Ombudsman and the manner or filing cases either
suo moto or on reference by State Government
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(v) Procedure to be followed during the inquiry, which as far as possible should be summary
proceedings;
(vi) The manner of implementing the order of the Ombudsman and further proceedings;
(vii) Any other matter which the State Government may deem necessary to prescribe.
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Annexure 6.1
A Copy of the relevan provision of the State Finance Commission in the
Finance Commission (Miscellaneous Provisions) Act, 1951
1. The Finance Commission (Miscellaneous Provisions) Act, 1951
The Finance Commission (Miscellaneous Provisions) Act, 1951 deals with aspects relating to
the central finance commission. It is also enclosed for guidance
THE FINANCE COMMISSION (MISCELLANEOUS PROVISIONS) ACT, 1951
ACT NO. 33 OF 1951
An Act to determine the qualifications requisite for appointment as members of the Finance
Commission and the manner in which they shall be selected, and to prescribe their powers.
[16th May. 1951.]
BE it enacted by Parliament as follows:-1. Short title. This Act may be called the Finance Commission (Miscellaneous Provisions) Act,
1951.
2. Definition. In this Act, "the Commission" means the Finance Commission constituted by
the President pursuant to clause (1) of article 280 of the Constitution.
3. Qualifications for appointment as, and the manner of selection of, members of the
commission. The Chairperson of the Commission shall be selected from among persons who
have had experience in public affairs, and the four other members shall be selected from
among persons who
a) are, or have been, or are qualified to be appointed as Judges of a High Court; or
(b) have special knowledge of the finances and accounts of Government; or
(c) have had wide experience in financial matters and in administration; or
d) have special knowledge of economics.
4. Personal interest to disqualify members. Before appointing a person to be a member of
the Commission, the President shall satisfy himself that that person will have no such
financial or other interest as is likely to affect prejudicially his functions as a member of the
commission; and the President shall also satisfy himself from time to time with respect to
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every member of the Commission that he has no such interest and any person who is, or
whom the President proposes to appoint to be, a member of the Commission shall,
whenever required by the President so to do, furnish to him such information as the
President considers necessary for the performance by him of his duties under this section.
5. Disqualifications for being a member of the Commission. A person shall be disqualified
for being appointed as, or for being, a member of the Commission,-(a) if he is of unsound mind;
(b) if he is an undischarged insolvent;
(c) if he has been convicted of an offence involving moral turpitude;
(d) if he has such financial or other interest as is likely to affect prejudicially his
functions as a member of the Commission.
6. Term of office of members and eligibility for reappointment. Every member of the
Commission shall hold office for such period as may be specified in the order of the
President appointing him, but shall be eligible for reappointment:
Provided that he may, by letter addressed to the President, resign his office.
7. Conditions of service and salaries and allowances of members.
The members of the Commission shall render whole-time or part- time service to the
Commission as the President may in each case specify, and there shall be paid to the
members of the Commission such fees or salaries and such allowances as the Central
Government may, by rules made 2*[by notification in the Official Gazette,] in this behalf
determine.
2*[(2) Every rule made under this section shall be laid, as soon as may be after it is made,
before each House of Parliament, while it is in session, for a total period of thirty days which
may be comprised in one session or in two or more successive sessions, and if, before the
expiry of the session immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the rule or both Houses agree that the rule
should not be made, the rule shall thereafter have effect only in such modified form or be of
no effect, as the case may be; so, however, that any such modification or annulment shall
be without prejudice to the validity of anything previously done under that rule.]
8. Procedure and powers of the Commission. (1) The Commission shall determine their
procedure and in the performance of their functions shall have all the powers of a civil court
under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the
following matters, namely:-Administrative Staff College of India
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(a) summoning and enforcing the attendance of witnesses;

(b) requiring the production of any document;
(c) requisitioning any public record from any court or office.
(2) The Commission shall have power to require any person to furnish information on such
points or matters as in the opinion of the Commission may be useful for, or relevant to, any
matter under the consideration of the Commission 3*[and any person so required shall,
notwithstanding anything contained in sub-section (2) of section 54 of the Indian Incometax Act, 1922 (11 of 1922), or in any other law for the time being in force, be deemed to be
legally bound to furnish such information within the meaning of section 176 of the Indian
Penal Code (45 of 1860)].
(3) The Commission shall be deemed to be a civil court for the purposes of sections 480 and
482 of the Code of Criminal Procedure, 1898 (5 of 1898).
Explanation.--For the purposes of enforcing the attendance of witnesses, the local limits of
the Commission's jurisdiction shall be the limits of the territory of India.
1. S. 7 renumbered as sub-section (1) thereof by Act 4 of 1986, s. 2 and Sch. (w.e.f. 15-51986). 2. Ins. by s. 2 and Sch., ibid. (w.e.f. 15-5-1986). 3. Added by Act 13 of 1955, s. 2.
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Annexure 6.2
A copy of the extracts relating to State Finance Commissions in the Model Panchayat
Raj Act circulated by the Ministry of the Panchayat Raj, Government of India
Chapter XIII
State Finance Commission
145. Establishment of State Finance Commission (SFC).
2
(1) In this section, Commission means the Finance Commission constituted by the Governor
pursuant to clause (1) of article 243-I of the Constitution.
(2) The Chairman of State Finance Commission shall be appointed by the Governor on the
recommendation of Collegiums, the Chief Minister, the Speaker of the Legislative Assembly and the
Leader of Opposition in the Legislative Assembly.
(3) The Commission shall consist of such number of members not exceeding five including the
Chairman and excluding the Secretary, as may be determined by the State Government. However,
there should be a full-time Secretary, to enable adequate attention to the issues of information
collection and analysis, office management and related activities:
Provided that members of the commission may be appointed on part time basis.
(4) A permanent SFC cell shall be created in the State Finance Department for annual accounts, other
data compilation and updating and other functions as may be prescribed. This cell may be headed by
the Secretary of the SFC.
(5) The Commission shall review the financial position of the Panchayats and submit
recommendations to Governor regarding,
(a) (i) the sharing among the State Government and Panchayats of the net-income of the taxes,
duties, cess and fees which are being levied by the State Government and which may be shared with
the Panchayats as per the Constitution and dividing among the Panchayats at all levels, their shares
in such incomes;
(ii) Fixing the taxes, duties, cess and fees which may be ear marked for the Panchayats and may be
expended by them;
(iii) The criteria regulating the financial aid etc. for the Panchayats from the State Consolidated Fund;
(b) Steps necessary for improving the financial position of the Panchayats; and
(c) Any other matters which is being left to the commission by the Governor taking into account of
the interest of the financial security of the Panchayats.
(6) The Governor shall cause to be laid before the Assembly each recommendation submitted by the
commission under sub-section (3) along with explanatory memorandum regarding the steps taken
on it.
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149. Procedure to be followed by SFC.

The SFC shall meet at such time and place and shall observe such procedure in regard to the
transaction of business at its meeting as may be determined by the SFC.
150. Officers and staff of SFC.
Officers having knowledge and experience in financial matters shall be appointed as staff of the SFC
in order to assist the SFC.
151. Salaries and Allowances.
The salaries and allowances payable to and other terms and conditions of service of the officers and
other employees appointed for the purpose of the SFC shall be such as may be prescribe.
152. Analysis of the finances of Panchayats and making recommendations for improvement.
SFC shall carry out through analysis of the finances of Panchayats and make concrete
recommendations for improvements in their working. In case of smaller Panchayats such
recommendations shall be broad in nature, but in case of larger Panchayats, recommendations
should be more specific.
153. Adoption of objective and transparent norms for devolution and distribution of funds.
The SFC shall evolve objective and transparent norms for devolution and distribution of funds. The
norms should include area-wise indices for backwardness. SFCs shall link the devolution of funds to
the level or quality of civic amenities that citizens would expect.
154. Mechanism to review implementation of SFC recommendation.
A mechanism be put in place which reviews the implementation of all the recommendations of the
SFCs. The devolution of funds may be made conditional to Panchayats agreeing to implement the
recommendations of the SFCs.
155. Action taken Report on recommendation of SFCs to be placed before the State Legislature. The
Action Taken Report on the recommendations of the SFC must be compulsorily placed in the
concerned State Legislature within six months of submission and followed with an annual statement
on the devolution made and grants given to individual Panchayats and the implementation of other
recommendations through an appendix to the State Budget documents. The Action Taken Report
shall describe the action taken or proposed on each recommendation. It shall also provide reasons
behind non-acceptance of particular recommendations . the action taken report shall be publicized
to make citizens aware of its contents and implications.
156. Norms for Staffing of Panchayats:
The SFCs should evolve norms for staffing of panchayats based on Activity Mapping i.e., an analysis
of the roles and responsibilities assigned to the panchayats at different levels.
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Annexure 6.3
Extract of the provisions relating to Finance Commission from State Panchayat Acts
1. The Andhra Pradesh Panchayat Raj Act, 1994
PART V
Finance Commission
235. Constitution of Finance Commission :-(1) The Governor shall on the recommendation
of the State Government constitute a Finance Commission as soon as may be within one
year from the date of commencement of the Constitution (Seventy-third) Amendment Act,
1992 and thereafter on the expiration of every fifth year. (2) The Finance Commission shall
consist of a Chairperson and four other members of whom one shall be the MemberSecretary. The Governor shall by order appoint on the recommendation of the Government
the Chairperson and other members of the Commission. (3) The Government shall make
available to the Finance Commission such staff as may be necessary for the discharge of the
functions conferred on the Finance Commission.
2. Kerala Panchayats Act, 1993
CHAPTER XVII -- FINANCE COMMISSION AND ITS POWERS
186. Finance Commission. -(1) In this section, commission means the Finance Commission
constituted by the Governor pursuant to clause (1) of article 243-1 of the Constitution.
(2) The Commission shall consist of such number of members not exceeding three including
the Chairperson as may be determined by the Government:
Provided that members of the commission may be appointed on part time basis.
(3) Persons who are to be appointed as member of the Commission shall be (a) One shall be a person having special knowledge and experience in financial matters and
economics; and
(b) The other two shall be persons having experience in public administration or local
administration or having special knowledge in financial matters and accounts of the
Government and local bodies.
(4) Every member of the commission shall hold office for such period may be specified in the
order of the Governor appointing him, but shall eligible for re-appointment.
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3. Gujarat State Panchayati Raj Act 1993
4. The Rajasthan Panchayati Raj Act, 1994

118. Finance Commission.- (1) The Finance Commission, hereinafter in this section referred
to as the "Commission", shall consist of the following members to be selected in such
manner as may be prescribed (a) A Chairperson from amongst persons who have had experience in public affairs; and
(b) Such number of other members not exceeding four as the State Government may
determine from time to time from amongst persons who(i) have special knowledge of the finance and accounts of the Government; or
(ii) have had wide experience in financial matters and in administrator; or
(iii) have special knowledge of functioning of the Panchayati Raj Institutions and
Municipal Bodies; or
(iv) have been closely associated with preparation and / or implementation of rural and
urban development programmes.
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5. West Bengal Panchayat Act, 1973.

206A.
(1) As soon as may be after the commencement of the West Bengal Panchayat
(Amendment) Act, 1994, and thereafter at the expiry of every five years, there shall be a
Finance Commission constituted by the Governor, by notification, under clause (1) of article
243-1 of the Constitution of India which shall consist of not more than five members
including the Chairperson, selected from amongst the jurists, economists, administrators
and social and political workers of eminence.
6. The Sikkim Panchayat Act, 1993
Chapter X
Constitution of the State Finance Commission
96.Definition.
In this Chapter Commission means the State Finance Commission constituted by the
Governor in pursuance of clause (1) of Article 243 1 of the constitution.
97.Qualification for appointment as & manner of selection of members of Commission.
The Chairperson of the Commission shall be selected from among persons who have had
experience in public affairs of the State and the two other members shall be selected from
among persons who(a) are,or have been or are qualified to be appointed as judges of a High Court; or
(b) have special knowledge of the finance and accounts of the State Government; or
(c) have had wide experience in financial matters and in administration ; or
(d) have special knowledge of economics.
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Annexure 8.1
The West Bengal 1[***] Valuation Board act, 1978
[West Bengal act LVII of 1978]
[February 5,1979]
As amended by the West Bengal Valuation Board
(Amendment) Act,2003m (West Ben. Act XII of 2003)
An Act to provide for a 1[***] Valuation Board and valuation Authorities the purpose of
valuation of lands and buildings in West Bengal.
WHEREAS it is expedient to establish a 1[***] Valuation Board and Valuation Authorities for
the purpose of valuation of lands and buildings in West Bengal;
It is hereby enacted in the Twenty-ninth Year of the Republic of India, by the Legislature of
West Bengal, as follows: 1.Short title, extent and commencement. ---(1) This Act may be called the West Bengal
1[***] Valuation Board Act, 1978.
(2) It extends to the whole of West Bengal.
(3) It shall come into force in such area and on such date as the State Government may, by
notification, appoint and different dates may be appointed for different areas.
2.Definitions. --- (1) In this Act, unless there is anything repugnant in the subject or context,
2[***]
3[(aa) Administrator or Board of Administrators has the same meaning as in sub-section
(3) of section 14 of the West Bengal Municipal Act, 1993 (West Ben. Act XXII of 1990) ; ]
4[5[(aaa)] Asansol means Asansol as defined in the Asansol Municipal Corporation Act,
1990 (West Ben. Act XXII of 1990) ; ]
(b) Board means then 1[***] Valuation board established under section 4;
6[(bb) Board of Councilors means the Board of Councilors of a Municipallity;]
1. The word Central omitted by section 2 of the West Bengal Central Valuation Board
(Amendment) act, 2002 (West Ben. Act XVII of 2002).
2. Clause (a) omitted by section 2(1) of the West Bengal Central Board (Amendment) Act, 1995
(West Ben. Act XVII of 1995) (with retrospective effect from 25.3.1994). which was earlier as under :
(a)Authority means a Valuation authority constituted under section 27;.
3. Clause (aa) inserted by section 3(a) of the West Bengal Central Valuation Board (Amendment) Act,
2002 (West Ben. Act XVII of 2002).
4. Clause (aa) inserted by section 2(1) (b) of the west Bengal Central Valuation Board (Amendment)
Act, 1995 (West Ben. Act XVI of 1995).
5. Existing clause (aa) renumbered as clause (aaa) by section 3(a) of the West Bengal Central
Valuation board (Amendment) Act, 2002 (West Ben. Act XVII of 2002).
6. Clause (bb) inserted by section 2(1) (c) of the west Bengal Central board (Amendment) Act, 1995
(West Ben. Act XVI of 1995).
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(c) 1[Kolkata means 1[Kolkata] as defined in the 1[Kolkata] Municipal Corporation Act,
1980 (West Ben. Act LIX of 1980);
2[(d) Chandernagore means Chandernagore as defined in the Chandernagar Municipal
corporation act, 1990 (west ben. Act XXXII of 1990;]
3[(e) Councilor means a Councilor of a Corporation or Municipality;]
4[***]
5[(f) Corporation means the 1[Kolkata] Municipal Corporation. The Howrah Municipal
Corporation, the Siliguri Municipal Corporation, or the Chandernagar Municipal
Corporation;]
(g) Fund means the 6[***] Valuation Board Fund referred to in section 20 ;
(h)Howrah means Hoerah as defined in the Howrah Municipal Corporation act,1980 (West
Ben.Act ) LVII of 1980) ;
(i)land or building includes a bustee;
7[(ii) municipal area indicates a notified area;]
8[(l) Municipality means a Municipality as defined in the West Bengal Municipal Act, 1993
(West Ben. Act XXII of 1993) and includes a Notified Area Authority;]
(k) Notification means a notification published in the Official Gazette;
1. Substitued by section 5 of the West Bengal capital City (Change of Name) Act, 2001 (West Ben.Act
XVII of 2001) (w.r.e.f.1.1.2001) for Calcutta.
2. Clause (d) substituted by section 2(1) of the West Bengal Central Valuation Board
(Amendment)Act, 1995 (West Ben. Act XVI of 1995), which was earlier as under:
(d) Chandernagar means Chandernagore as defined in the Chandernagore Municipal Act, 1955
(West Ben. Act XVII of 1995) , which was earlier as under:
3. Clause (e) substituted by section 2(1) (e0, ibid, which was earlier as under (e) Commissioner of a
Municipality includes a notified area authority;.
4. Clause (ee) omitted by section 3(b) of the West Bengal Central Valuation Board (Amendment)
act,2002 (West Ben.Act XVII of 2002), which was earlier substituted by section 2(1) (f) of the West
Bengal Central Valuation Board (Amendment) Act, 1995 (West Ben. Act XVI of 1995) as under:
(ee) consolidated rate means the consolidated rate leviable under the Calcutta Municipal
Corporation Act, 1980 (West Ben. Act LIX of 1980) ;.
5. Clause (f0 substituted by section 2 (10 (g) of the West Bengal Central Valuation Board
(Amendment) Act, 1955 (West Ben. Act XVI of 1995), which was earlier as under:
(f) Corporation means the Calcutta Municipal Corporation and includes the Howrah Municipal
Corporation and the Municipal Corporation of Chandernagore;.
(Amendment) Act, 2002 (West Ben. Act XVII of 2002).
7. Clause (ii) inserted by section 2(10 (gg) of the West Bengal Central Valuation Board (Amendment)
Act, 1995 (West Ben. Act XVII of 1995).
8. Clause (l) substituted by section 2(1) (h), ibid, which was earlier as under:
(l) Municipality means a municipality constituted under the Bengal Municipal Act, 1932 (Ben. Act
XV of 1932) and includes a notified area constituted under that Act;
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1[(kk) property tax means the property tax on the annual value of lands and buildings
determined and leviable under the Howrah Municipal Corporation Act, 1980 (West Ben. Act
LVII of 1980), 2[the Kolkata Municipal Corporation Act, 1980 (West Ben. Act LIX of 1980),]
the Siliguri Municipal Corporation Act, 1990 (West Ben. Act XXX of 1990), the Asansol
Municipal Corporation Act, 1990 (west Ben. Act XXXI of 1990) , the Chandernagore
Municipal Corporation Act,1990 (West Ben. Act XXXII of 1990), or the WEST Bengal
Municipal Act, 1993 (West Ben. Act XXII of 1993) , as the case may be;]
(l) Prescribed means prescribed by rules made under this Act;
(m) Regulations means regulations made under section 29;
3[(mm) Siliguri means Siliguri as defined in the Siliguri Municipal Corporation Act, 1990;]
[(n) valuer-surveyor means a value-surveyor Grade I, or the valuer-surveyor GradeII,
registered as such under section 8B.]
5[(2) Words and expressions used in this Act but not defined shall have the same meaning
as in the Howrah Municipal Corporation Act, 1980 or the 6[Kolkata] Municipal Corporation
Act, 1980 or The Siliguri Municipal Corporation Act, 1990 or the Asansol Municipal
Corporation Act, 1990 or the Chandernagore Municipal Corporation Act, 1990 or the West
Bengal Municipal Act, 1993.]
3. Act to override other laws. ---With effect from the date of notification referred to in
subsection (1) of section 9 the 7[provisions of the Howrah Municipal Corporation Act, 1980
or the 6[Kolkata] Municipal Corporation Act, 1980 or the Siliguri Municipal Corporation act,
1990 or the Asansol Municipal Corporation act, 1990 or the Chandernagore Municipal
Corporation Act, 1990
1. Clause (kk) inserted by section 2(10 of the West Bengal Central Board (Amendment) Act, 1955
2. INSERTED BY SECTION 3(C0 OF THE West Bengal Central Valuation Board (Amendment0 act, 2002
(West Ben. Act XVII of 2002)
3. Clause (mm0 inserted by section 2(10(j) of the West Bengal Central Board (Amendment) Act, 1955
(West Ben. Act XVI Of 1995).
4. Clause (n) substituted by section 2 of the West Bengal Central Board (Second Amendment) Act,
1994 (West Ben. Act XLIV Of 1994) (w.e.f. 10.10.1994), which was earlier as under:(n) valuersurveyor means a value-surveyor registered as such under section 8B.
5. Sub-section (2) substituted by section 2(20 of the West Bengal Central Valuation Board
(amendment) Act, 1995 (West Ben. Act XVI of 1995), which was earlier as under:(2) Words and
expressions used in this Act but not defined shall have the same meanings as in the Bengal Municipal
Act, 1932 or the Calcutta Municipal Corporation Act, 1980 or the Howrah Municipal Corporation Act,
1980, as the case may be.
6. Substituted by section 5 of the West Bengal Central Valuation Board (Amendment) Act, 2001
(West Ben. Act XVIII of 2001) (w.r.e.f.1.1.2001) for Calcutta.
(West Ben. Act XVI of 1995), for provisions of the Bengal Municipal Act 1932 or the Calcutta
Municipal Corporation Act, 1980 or the Howrah Municipal Corporation Act, 1980.
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Or the West Bengal Municipal Act, 1993] or any other law relating to any of the matters
provided for in this act shall be deemed, in respect of such area, to have been modified to
the extent of the provisions made in this Act.
4. Establishment of the Board. ------ (1) The State Government may, by notification,
establish, for the purpose of this Act, a Board to be called the 1[***] Valuation Board.
(2) The Board shall be a body corporate with perpetual sucession and a common seal and
may sue or be sued in its corporate name and shall be competent to acquire, hold and
dispose of any property, both movable and immovable, to enter into contracts and to do all
things necessary for the purpose of this Act.
5. Members of the Board. ----- (1) The Board shall consist of a Chairperson and 5[four] other
members to be appointed by the State Government.
(2) The Chairperson shall be a person who is or has been an officer of the State Government
3[not below the rank of Secretary including ex-officio Secretary] 4[***]].
5[(3) 6[The four other members of the Board shall hold office for such period not exceeding
7[four years] as the State Government may determine and the terms and conditions of their
service, including salaries and allowances shall be such as may be prescribed.
8[(5) The Board shall have a Member-Secretary who shall be appointed by the State
Government from amongst the members referred to in sub-section (3) and shall be the
Chief Executive Officer of the Board.]
2. Substituted by section 2(a) of the West Bengal Central Valuation Board (Amendment) Act, 1994
(West Ben. Act VII of 1994) for the word eight, which was earlier substituted by section 2 of the
West Bengal Central Valuation Board (Amendment) Act, 1989 (West Ben. Act XXXII of 1989) for the
word two.
(West Ben. Act XII of 1988) for not below the rank of a Secretary,.
4. The words or Chief Engineer omitted by section of the West Bengal Central Valuation Board
(Amendment) Act, 1989 (West Ben. Act XXXII of 1989).
5. Sub-section (3) substituted by section 2, ibid.
6. Substituted by section 2(b) of the West Bengal Central Valuation Board (Amendment) Act, 1994
(West Ben. Act VII of 1994) for The eight pther members shall include such number of officers of
the State Government and non-officisl experts.
(West Ben. Act XXXII of 1989) for six years.
8. Sub-section (5) inserted by section 2, ibid.
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5a. Validation. ---- Notwithstanding anything contained elsewhere in this Act, no action of
the Board shall be invalid or otherwise called in question merely on the ground of the
existence of any vacancy (initial or subsequent) in the office of the members of the Board.
1[6.Officers and employees. --- (1) The Board may create such posts of officers and
employees and fill up such posts as may be approved by the State Government.
(2) The terms and conditions of service including salaries and allowances of the officers and
employees appointed under sub-section (1) shall be determined by regulations.]
7.Employment of staff of the State Government. ---- (1) The Board may take over and
employ such staff of the State Government, as the State Government may take available.
(2) During the period of such employment all matters relating to pay, allowances, leave,
retirement, pension, provident fund and all other terms and conditions of service of the
staff so made available and taken over shall be regulated by the West Bengal Service Rules
or such other rules on the subject as may, from time to time be made by the State
Government for its employees.
(3) Subject to the provisions of sub-sections (2) and (4), every person so taken over and
employed shall be subject to the provisions of this Act and the regulations.
(4) All permanent Government employees taken over and employed under sub-section (1)
shall have a lien on their post in the service of the State Government and the period of their
service under the Board shall, on reversion to the service of the State Government, be
counted for the purpose of their promotion, increments, pensions and other matters
relating to their service.
2[8. Expenditure incurred on account of salaries and allowances including contingencies. -- (1) The expenditure incurred by the Board for
1. Section 6 substituted by section 4 of the West Bengal Central Valuation Board (Amendment) Act,
2002 (West Ben. Act XVII of 2002) , which was earlier as under:
6 Officers and other staff. ---(1)***
***
(3) The Board may create such posts of other officers and employees as may be approved by the
State Government:
Provided that Board shall not, without the previous approval of the State Government, appoint any
officer in the scale o pay, the maximum of which exceeds one thousand five hundred rupees a
month.
(4) The terms and conditions of service, including salaries and allowances, of the officers, and
employees appointed under dub-section (3) shall be determined by regulations..
2. Section 8 substituted by section 5, ibid, which was earlier as under:
8. Expenditure incurred on account of salaries and allowances. --- the expenditure
incurred by the Board for meeting the salaries and allowances of the Chairperson, the
Member-Secretary, the other members and the officers and employees serving under the Board
shall be defrayed out of the Fund..
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meeting the salaries and allowances including contingencies of the Chairperson and the
Member-Secretary serving under the Board under the Board shall be defrayed out of the
Fund to be provided by the State Government.
(2) The expenditure incurred by the Board for meeting the salaries and allowances including
contingencies in respect of all the officers and employees serving under the Board shall be
defrayed out of the Fund to be provided by the State Government.
(3) The expenditure towards contingencies for maintaining normal financial activities shall
be met our of the Fund so provided by the State Government.
1[8A.Maintenance of register of registered valuer-surveyors 2[Grade I and registered
valuer-surveyors Grade II]. The Board shall maintain in the prescribed manner a register
of registered valuer-surveyors 3[Grade I and registered valuer-surveuors Grade II].
8B.Registration of valuer-surveyor4 [Grade I and valuer-surveyor Grade II]. -- Every person who possess such qualifications as may be prescribed shall, subject to such
terms and conditions, and on payment of duch fee, as may be prescribed, be entitled to
have his name entered 5[as a valuer-surveyor Grade I of valuer-surveyor Grade II ] in the
register of registered valuer-surveyors 6[Grade I and registered valuer-surveyor Grade II].]
9. Determination of valuation and its duration.---(1) The State Government shall, from time
to time by notification, specify the area where, the general valuation of lands and buildings
shall be made by the board, in accordance with the 7[provisions of Howrah Municipal
Corporation act,1980 (West Ben. Act LVII of 1980) or the 8[Kolkata] Municipal Corporation
Act, 1980 (West Ben. Act LIX of 1980) or The Siliguri Municipal Corporation Act, 1990 (West
Ben. Act XXX of 1990) or the Asansol Municipal Corporation Act, 1990 (West Ben. Act XXXI of
1990) or the Chandernagore Municipal Corporation Act, 1990 (West Ben. Act XXXII of 1990)
or the West Bengal Municipal Act, 1993(West Ben. Act XXII of 1993)] or any other law for
the tome being in force in such area, as the case may be, in so far as they relate to the
determination of annual valuation.
1.Section 8a and 8B inserted by section 3 of the West Bengal Central Valuation Board (Amendment)
Act, 1993 (West Ben. Act XV of 1993).
2.Inserted by section 3(a) of the West Bengal Central Valuation Board (Second Amendment) Act,
1994 (West Ben Act XLIV of 1994) (with effect from 10.10.1994).
3.Inserted by section 3(b), ibid (with effect from 10.10.1994).
4.Inserted by section 4(a), ibid (with effect from 10.10.1994).
5.Inserted by section 4(b), ibid (with effect from 10.10.1994).
6.Inserted by section 4(c), ibid (with effect from 10.10.1994).
7.Substituted by section 4(1) of the West Bengal Central Valuation Board (Amendment) Act, 1995
(West Ben. Act XVI of 1995) for provisions of the Bengal Municipal Act, 1932 (West Ben.Act XV of
1932) or the Calcutta Municipal Corporation Act, 1980 or the Howrah Municipal Act, 1980.
8.Substituted by section 5 of the West Bengal Capital City (Change of Name) Act, 2001 (West Ben.
Act XVIII of 2001) (w.r.e.f.1.1.2001) for Calcutta
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1[Provided that the Board may, in accordance with a resolution in this behalf adopted at a
meeting of the Board and with the previous approval of the State Government, require 2[a
valuer surveyor Grade II ] to make, subject to such conditions as may be prescribed, the
general valuation of lands and buildings in the area as aforesaid or in any part thereof such
remuneration as the Board may determine, and every such valuation shall be deemed to
have been made by the Board.
(2) The valuation made by the Board shall become operative with effect from such date, as
the State Government may, by notification, appoint in this behalf and shall remain in force
in respect of such area for a period of 3[five years] and may be revised thereafter at the
terminaton of successive periods of 3[five years]:
Provided that 4[notwithstanding anything contained in the foregoing provisions of this
section, in 5[Kolkata] and Howrah and in any Municipality,] the valuation shall remain in
force in such groups of Wards and for such period as may be prescribed and such valuation
may be revised thereafter at the termination of successive periods of 3[five years] from the
expiry of the period so prescribed:
Provided further that the valuation of lands or buildings in any area made in accordance
with the provisions of 6[the West Bengal Municipal Act, 1993 (West Ben. Act XXII of 1993)]
or any other law shall remain in force for the period for which it was made under 6[the West
Bengal Municipal Act, 1993 (West Ben. Act XXII of 1993)] or any other law, as the case may
be.
7[(3) Notwithstanding anything contained in sub-sections (1) and (2), if, during the currency
of any period referred to in sub-section (2), any new building is erected, or any existing
building is reconstructed or substantially altered or improved, in any area, the
determination of valuation of such premises shall
1. Provison added by section 4 of the West Bengal Central Valuation Board (amendment0 Act, 1993
(West Ben. Act XV of 19893).
2. Substituted by section 5 of the West Bengal Central Valuation Board (Second Amendment) Act,
1994 (West Ben. Act XLIV of 1994) for any valuer-surveyor.
3. Substituted by section 2 of the west Bengal Valuation Board (Amendment) Act, 2003 (West Ben.
Act XII of 2003) for six years.
4. Substituted by section 4 of the West Bengal Valuation Board (Amendment) Act, 1994 (West Ben.
Act VII of 1994) for in Calcutta and Howrah.
5. Substituted by section 5 of the west Bengal Capital City (Change of name) Act, 2001 (West Ben.
Act XVIII of 2001) (w.r.e.f.1.1.2001) for Calcutta.
6. Substituted by section 4(2) of the west Bengal Central Valuation Board (Amendment) Act, 1995
(West Ben. Act XVI of 1995) for the Bengal Municipal Act, 1932 (Ben. Act XV of 1932).
7. Sub-section (3) substituted by section 6(a) of the West Bengal Central Valuation Board
(Amendment) Act, 2002 (West Ben. Act XVII of 2002), which was earlier as under:
(3) Notwithstanding anything contained in sub-sections (1) and (2), if during the currency of any
period referred to in sub-section (2), any new building is erected or an existing building is
reconstructed or substantially altered o improved in any area, the Board may cause the entire
premises to be valued or revalued and the valuation or revaluation so made shall remain in force for
the unexpired portion of the period referred to in that sub-section.
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Be subject to the same criteria as has been fixed by the Board for such premises, and its
valuation shall be covered by such procedure as may be determined by the Board for its
immediate valuation with prior mandatory filling of statement of particulars under section
16 by the owner or occupier. The valuation so made shall remain in force from the quarter
intimated by the Municipality or Corporation for the unexpired portion of the period
referred to in sub-section (2). The procedure of review, mentioned in sections 14 and 15
shall be followed.]
(4) The Corporation and 1[the Board of Councilors] shall in each year and within such time,
as may be prescribed, send to the Board a list of all new buildings erected and also all
existing buildings reconstructed or substantially altered or improved within their respective
jurisdiction 2[together with suggested valuation in terms of Boards guideline for finalization
and approval of valuation by the Board].
3[***]
4[11.Publication of final valuation list. ------ When the general valuation of lands and
buildings has been made by the Board under section 9, the Board shall prepare a valuation
list and shall give public notice of the place or places where the valuation list may be
inspected, and the valuation as aforesaid together with the amount of 5[property tax,
payable thereon,] as recorded in the valuation list shall, subject to the provisions of sections
14 and 15, be conclusive. The Board shall also give a notice in writing to the owner or to the
lessee, sub-lessee or occupied of any land or building, as the case may be, in all cases in
which the valuation of such land or building is made for the first time or the annual
valuation of such land or such land or building as increased:
1. Substituted by section 4(3) of the West Bengal Central Valuation Board (Amendment) act, 1995
(West Ben. Act XVI of 1995) for the Commissioners of municipality.
2. Inserted by section 6(b) of the West Bengal Central Valuation Board (Amendment) Act, 2002
(West Ben. Act XVII of 2002).
3. Section 10 omitted by section 5 of the West Bengal Central Valuation Board (Amendment) Act,
1994 (West Ben. Act VII of 1994), which was earlier as under:
4. "10. Publication of the draft valuation list. (1) When the valuation under section 9 of the lands
and buildings in any area has been completed the Board shall cause such valuation and the amount
of consolidated rate their to be entered in a list.
(2) The Board shall publish the valuation list is such manner as may be prescribed and shall specify a
date within which objections to the list may be filed.
(3) After the expiry of the date specified in sub-section (2) and within such period thereafter as may
be prescribed the objection shall be determined, after giving the objector an opportunity of being
heard, by such officer or officers of the Board as it may specify in this behalf.
(4) The objections shall be filed and determined in such manner as may be prescribed.
4. Section 11 substituted by section 6, ibid, which was earlier as under:
"11. Publication of final valuation list. When objections have been determined, the Board shall
prepare a final valuation list and shall give public notice of the place or places where such list may be
inspected and the valuation together with the amount of consolidated rate thereon as recorded in
the final valuation list shall, subject to the provisions of sections 14 and 15, be Conclusive.
(West Ben. Act XVII of 2002) for "consolidated rate or property tax, as the case may be, payable
thereon", which were earlier substituted by section 5(1) of the West Bengal Central Valuation Board
(Amendment) Act, 1995 (West Ben.Act XVI of 1995) for "consolidated rate thereon".
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Provided that the valuation list as aforesaid may be prepared and published in respect of all
the holdings of 1 [any municipal area or any area within the jurisdiction of a Corporation]
specified in the notification under sub-section (1) of section 9 or the holdings of 2[any
municipal area withinsuch group of wards or any area within such group of wards within the
jurisdiction of a Corporation] as the State Government may determine.]
3[* * * I
4[12A. Alteration or amendment of 5 [***] valuation list (1) Notwithstanding anything
contained in section 11, the Board may at any time before the date of hearing of an
application for review under section 14 and for reasons to be recorded in writing, direct any
alteration or amendment of the 6[* * *] valuation list
(a) by inserting therein the name of any person whose name ought to be inserted; or
(b) by inserting therein any land or building previously omitted together with the valuation
thereof; or
(c) by striking out the name of any person or any land or building not liable for payment of
7[property tax; or]
(d) by increasing or decreasing the annual valuation of any holding which, in the opinion of
the Board, has been substantially undervalued or over-valued by reasons of fraud, misrepresentation, 8[mistake, error, or subsequent construction or inadvertence; or]
9[(e) by correcting any patent error or omission.]
1. Substituted by section 5(2) (a) of the West Bengal Central Valuation Board (Amendment) Act,
1995
(West Ben. Act XVI of 1995) for "any area of a municipality".
2. Substituted by section 5(2) (b), ibid for "any area within such group of wards of a municipality".
3. Section 12 omitted by section 7 of the West Bengal Central Valuation Board (Amendment) Act,
1994
(West Ben. Act VII of 1994), which was earlier as under:
"12. Amendment of valuation list by Board. The Board may, for reasons to be recorded in writing,
amend the valuation list at any time before the date specified for filing objections under sub-section
(2) of section 10.
4. Section 12A inserted by section 4 of the West Bengal Central Valuation Board (Amendment) Act,
1989 (West Ben. Act XXXII of 1989).
5. The word "final" omitted by section 8(a) of the West Bengal Central Valuation Board
(Amendment) Act, 1994 (West Ben. Act VII of 1994).
6. The word "final" omitted by section 8(b), ibid.
(West Ben. Act XVII of 2002) for "consolidated rate or property tax, as the case may be; or", in which
the words "or property tax, as the case may be" were inserted by section 6(1) (a) of the West Bengal
Central Valuation Board (Amendment) Act, 1995 (West Ben. Act XVI of 1995).
8. Substituted by section 8(b), ibid for "mistake, or error; or", in which the words "or error; or" were
substituted by section 6(1) (b) of the West Bengal Central Valuation Board (Amendment) Act, 1995
(West Ben. Act XVI of 1995) for "or error".
9. Clause (e) inserted by section 6(1)( c) of the West Bengal Central Valuation Board (Amendment)
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13. Preparation of municipal assessment book and assessment list. Omitted by the West
Bengal Central Valuation Board (Amendment) Act, 1984 (West Ben. Act XL of 1984).
14. Application for review. (1) The owner or occupier or any other person primarily liable
to pay 2[property tax,] may if dissatisfied with the valuation of any land or building as
entered in the 3[* * *] valuation list, apply to the "[Corporation or the 5[Board of
Councilors] concerned] to review the valuation.
(2) The application shall be filed within such time and in such manner as may be prescribed.
(3) Every application presented under sub-section (1) shall be heard and determined by a
Review Committee constituted under section 15 in accordance with such procedure as may
be prescribed.
6[(4) No application under sub-section (1) shall be entertained unless the amount of
7[property tax,] on the previous valuation of the land or building as aforesaid has been paid
or deposited in the office of the Corporation or Municipality, as the case may be, before the
application is filed, and every such application shall fail unless the amount of 7[property
tax,] on the previous
1. Sub-section (2) omitted by section 6(2) of the West Bengal Central Valuation Board (Amendment)
Act, 1995 (West Ben. Act XVI of 1995), which was earlier asunder:
" (2) A notice shall be given to the owner or to the lessee, sub-lessee or occupier of the land or the
building for filing of objection, if any, within thirty days of receipts of such notice, before an order for
alteration or amendment is made by the Board under sub-section (1), and no application for review
preferred under section 14 in respect of such land or building shall be heard until the matter is
disposed of by the Board:
Provided that the Board shall dispose of such mater within one month of the filing of objection, if
any.".
(West Ben. Act XVII of 2002) for "consolidated rate or property tax, as the case may be, in which the
words "or property tax, as the case may be," were inserted by section 7(1) (a) of the West Bengal
Central Valuation Board (Amendment) Act, 1995 (West Ben. Act XVI of 1995).
3. The word "final" omitted by section 9(a) of the West Bengal Central Valuation Board
(Amendment) Act, 1994 (West Ben. Act VII of 1994).
(West Ben. Act XXXII of 1989).
5. Substituted by section 7(1) (b) of the West Bengal Central Valuation Board (Amendment) Act,
1995 (West Ben. Act XVI of 1995) for "Commissioners of the municipality".
6. Sub-section (4) substituted by section 9(>) of the West Bengal Central Valuation Board
(Amendment) Act, 1994 (West Ben. Act VII of 1994), which was earlier as under:
"(4) No application shall be entertained unless the amount of consolidated rate as recorded in the
final valuation list referred to in section 11 has been paid or deposited in the office of the
Corporation or the Municipality, as the case may be, before the application is filed and the
application shall fail unless such amount is continued to be paid or deposited till the application
7. Substituted by section 9(t>)(/) of the West Bengal Central Valuation Board (Amendment) Act,
2002 (West Ben. Act XVII of 2002) for "consolidated rate or property tax, as the case may be,", in
which the words "or property tax, as the case may be," were inserted by section 7(2) (a) of the West
Bengal Central Valuation Board (Amendment) Act, 1995 (West Ben. Act XVI of 1995).
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valuation as aforesaid is continued to be paid or deposited in the office of the Corporation

or Municipality, as the case may be, till-such application is finally disposed of.]
1 [Provided that wherever the previous valuation refers to a valuation made under the
Bengal Municipal Act, 1932 (Ben. Act XV of 1932), and in force on the date immediately
before the commence ment of the West Bengal Municipal Act, 1993 (West Ben. Act XXII of
1993), no application under sub-section (1) shall be entertained unless the amount of
z[property tax] on such previous valuation has been paid or deposited or is continued to be
paid or deposited or is continued to be paid or deposited in the office of the concerned
Municipality.]
3[Provided further that wherever the property tax on the previous valuation was being paid
to a Panchayat, which has been newly added as a municipal area, twenty-five per cent of
the newly calculated amount must be paid or deposited, and continued to be paid or
deposited, in the office of the concerned Municipality. The amount so paid or deposited
shall be adjusted against the valuation to be fixed after review.]
4[(5) In the cases of excessive hardship to the persons liable to pay property tax, the
Review Committee may, in its discretion, waive or reduce the advance payment of such tax
due before hearing.]
15. Review Committee. 5[(1) Every Corporation or ^Municipality] shall, by a resolution,
constitute Review Committee or Review Committees to hear applications
presented under sub-section (1) of section 14.
(2) Every Review Committee shall be presided over by the Chairperson or the ViceChairperson of the 6[Municipality] and shall consist of two other members, 7[being
Councilors] of the 6[Municipality], as may be nominated by the 8[Board of Councilors,] and
another member, who shall be an officer of the Board having knowledge in the assessment
of municipal valuation, deputed by the Board:
Provided that in the case of a Corporation, the presiding officer and 9[the two other
members] of the Review Committee shall be such persons as may
1. First proviso added by section 7(2) (b) of the West Bengal Central Valuation Board (Amendment)
2. Substituted by section 9(b) (ii) of the West Bengal Central Valuation Board (Amendment) Act,
2002(West Ben. Act XVII of 2002) for "consolidated rate".
3. Second proviso inserted by section 9(b) (ii), ibid.
4. Sub-section (5) inserted by section 9(c), ibid.
5. Sub-sections (1) and (2) substituted by section 6 of the West Bengal Central Valuation Board
(Amendment) Act, 1989 (West Ben. Act XXXII of 1989).
6. Substituted by section 8(1) of the West Bengal Central Valuation Board (Amendment) Act, 1995
(West Ben Act XVI of 1995) for "municipality".
7. Substituted by section 8(2) (a) (i), ibid for "being Commissioners".
8. Substituted by section 8(2)(a)(ii), ibid for "body of Commissioners,
(West Ben. Act VII of 1994) for "the other members".
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be nominated by the Corporation from amongst the Councilors 1[ ***] resolution :

Provided further that no decision of a Review Committee shall be invalid or called in
question merely by reason of any vacancy in the composition of the Committee or absence
of any member from a meeting thereof other than the president officer:
Provided also that the decision of a Review Committee shall be unanimous.]
2[Provided also that when a Corporation or Municipality is dissolved and no new body is
constituted within three months, the Administrator or the Board of Administrators, as the
case may be, shall take over the Review work in consultation with the Board.]
3[(3) The Review Committee may confirm, reduce, enhance or annul the valuation of land or
building or may suggest fresh valuation to be made after such further enquiry as may be
necessary:
Provided that where the Review Committee reduces the valuation of any land or building,
such reduction shall not be more than twenty-five per centum of the annual valuation of
such land or building except in the case of gross arithmetical or technical mistake, or striking
anomaly and the Review Committee shall, in every such case, record in writing the reasons
for such reduction, and send details of the same to the Board:
Provided further that with respect to any area identified as struck by natural calamity for a
particular year, by the State Government, the land or building in that area may, fully or
partially, be exempted from valuation by the Municipality or Corporation concerned for that
particular year.]
(4) If there is any difference of opinion 4[amongst] the members of the Review Committee,
the matter shall be referred to the Board for decision.
(5) The decision of the Review Committee or of the Board, as the case may be, shall be final
and no suit or proceeding shall lie in any Civil Court in
1. The words "or Alderman" omitted by section 8(2) (b) of the West Bengal Central Valuation Board
(Amendment) Act, 1995 (West Ben. Act XVI of 1995).
2. Fourth provison substituted by section 10(1) of the West Bengal Central Valuation Board
(Amendment) Act, 2002 (West Ben. Act XVII of 2002), which was earlier substituted by section
8(2)(c) of the West Bengal Central Valuation Board (Amendment) Act, 1989 (West Ben. Act XXXII of
1989) as under:
"Provided also that when a Corporation or a Municipality is dissolved, the State Government shall
constitute by notification the Review Committee consisting of a President and such number of other
members as may be specified in the notification for the purpose of hearing applications for review.
3. Sub-section (3) substituted by section 10(2), ibid, which was earlier as under:
" (3) The Review Committee may confirm, reduce, enhance or annul the valuation of land or building
or may direct fresh valuation to be made after such further enquiry as the Review Committee may
direct.
(West Ben. Act XXXII of 1989).
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respect of any matter which has been or may be referred to the Review Committee or has
been decided by the Review Committee or the Board.
16. Owner or occupier to file statement. Every owner or occupier of any land or building
shall file a statement before the Board in such manner and within such time and specifying
such particulars as may be prescribed.
17. Production and inspection of accounts and documents. The Board or any of its
officer authorized by the Board may, subject to such conditions as may be prescribed,
require the owner or the occupier of any land or building to produce before the Board of
such officer within such time as the Board or such officer may fix any accounts, registers or
documents or to furnish any information relating thereto as may be considered necessary
for the purpose of this Act and the owner or the occupier shall comply with such requisition.
1[18. Power to enter into land or building.(1) Any officer of the Board, when so
authorized by it in writing, may, without giving any previous notice to the owner, or the
occupier, of any land or building, enter into such land or building and make an inspection or
survey, or take measurements, thereof for the purpose of valuation.
(2) If such entry is refused, or any objection to such entry is made, the officer authorized
under sub-section (1) may give notice in writing to the owner or the occupier of such land or
building or his intention to enter into such land or building, and the owner or the occupier
of such land or building shall, upon such notice being duly served on him, extend all facilities
as may reasonably be expected of him to such officer for entering into such land or building
and for making inspection or survey, or for taking measurements, thereof, as the case may
be, for the purpose of valuation.]
19. Corporation and 2[Municipalities] to make payment to the Board.
(1) The 3[Kolkata] Municipal Corporation, the Howrah Municipal Corporation, 4[the Siliguri
Municipal Corporation, the Asansol Municipal
1.Section 18 substituted by section 9 of the West Bengal Central Valuation Board (Amendment) Act,
1995 (West Ben. Act XVI of 1995), which was earlier as under:
"18. Power to enter and inspect. Any officer of the Board when so authorized by it may, after
giving notice in the prescribed manner of his intention so to do, enter into any land or building for
the purpose of conducting survey and taking measurement or for the purpose of valuation, if such
entry has been refused or any objection to such entry has been made, and the owner or the
occupier of such land or building shall, upon such notice being duly served on him, extend all
facilities as may reasonably be expected of him to the officer of the Board so authorized for
conducting survey and taking measurement of such land or building or for the purpose of valuation,
as the case may be.".
2. Substituted by section 10(1), /We/for "municipalities".
3. Substituted by section 5 of the West Bengal Capital City (Change of Name) Act, 2001 (West Ben.
Act XVIII of 2001) (w.r.e.f. 1.1.2001) for "Calcutta".
4. Substituted by section 10(2)(a) of the West Bengal Central Valuation Board (Amendment) Act,
1995 (West Ben.Act XVI of 1995) for "the Municipal Corporation of Chandernagore, the
Commissioners of a municipality or the local authority of any area"
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Corporation, the Chandernagore Municipal Corporation, the Municipality or other local

authority of any area,] as the case may be, in respect of which notification under subsection (1) of section 9 has been made, 1[may in each year pay] to the Board such
proportion of the expenditure incurred by the Board on account of the valuation and
assessment, as the annual value of holdings in 2[Kolkata], Howrah, 3[Siliguri, Asansol or
Chandernagore or within the jurisdiction of the Municipality or the other local authority,] as
the case may be, bears to the aggregate of the annual value of the total number of holdings
in the concerned area.
(2) The Board shall calculate the amount payable by the Corporation, 4[the Municipality or
the other local authority] under sub-section (1) and may require the concerned body to pay
the amount within such time as may be prescribed.
(3) If the amount is not paid within the prescribed time, the Board may refer the matter to
the State Government and the State Government may pay the amount to the Board after
deducting the same from any grant payable by the State Government to the Corporation,
5[the Municipality or such other local authority,] as the case may be.
6[19A.Functions of the Board. (1) The Board may render such advice on valuation and
rating to a Corporation or a 7[Municipality] as the State Government may, from time to
time, require it to do or as the Board may consider necessary for carrying out the purposes
of this Act.
(2) The Board may also discharge such other functions in the field of valuation including
development of expertise in valuation of land and building and training of 8[officers and
employees of a Municipality] as the State Government may direct or as the Board may
consider necessary for carrying out the purposes of this Act.]
(West Ben. Act XVII of 2002) for "shall in each year pay".
2. Substituted by section 5 of the West Bengal Capital City (Change of Name) Act, 2001 (West Ben.
Act XVIII of 2001) (w.r.e.f. 1.1.2001) for "Calcutta".
3. Substituted by section 10(2) (b) of the West Bengal Central Valuation Board (Amendment) Act,
1995 (West Ben. Act XVI of 1995) for "Chandernagore, the municipality or within the jurisdiction of
the local authority,
4. Substituted by section 10(3), ibid for the "the Commissioners of a municipality or the local
authority".
5. Substituted by section 10(4), ibid for the "the Commissioners of a municipality or such local
authority,".
7. Substituted by section 11 (1) of the West Bengal Central Valuation Board (Amendment) Act, 1995
8. Substituted by section 11 (2), ibid for "municipal staff".
Page 133
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20. Fund of the Board. (1) The Board shall have a fund to be called the '[* * *] Valuation
Board Fund to which shall be credited
(a) such moneys as may be paid to the Board by 2fthe Corporation, the Municipalities and
the other local authorities] under section 19, and
(b) such other moneys as may be paid to the Board by the State Government or any other
authority or agency.
(2) All moneys received by the Board shall be deposited in the State Bank of India or in one
or more nationalized banks.
3[21.Grants or loans to the Board. The State Government may extend grants or loans to
the Board on such terms and conditions as that Government may determine.]
22. Expenditure and accounts. (1) The Board shall have the same financial powers as are
exercisable by the Secretary of a Department of the State Government. Matters beyond
such financial powers shall be referred by the Board to the State Government for decision.
4[(2) The Board shall keep accounts of all receipts and expenditure, and prepare annual
accounts, in a regular manner as per standard accounting norms or in such manner as may
be prescribed.]
23. Audit. (1) The Board shall cause its accounts to be audited annually by an auditor to
be appointed by the State Government and the auditor so appointed shall have the right to
demand the production of books, accounts, documents and other papers of the Board.
5[(2) The annual accounts prepared as per provisions of sub-section (2) of section 22 shall
be placed to the auditor for audit. As soon as the accounts have been audited, the Board
shall send a copy thereof together with a copy of the report of the auditor to the State
Government.]
(3) The Board shall comply with such directions as the State Government may, after perusal
of the report of the auditor, think fit to issue in this behalf.
1. The word "Central" omitted by section 2 of the West Bengal Central Valuation Board
(West Ben. Act XVI of 1995) for "the Corporation, the Commissioners of municipalities and the local
authorities".
3. Section 21 substituted by section 12 of the West Bengal Central Valuation Board (Amendment)
Act, 2002 (West Ben. Act XVII of 2002), which was earlier as under:
"21. Loan to the Board. The State Government may from time to time advance loans to the Board
on such terms and conditions as the State Government may determine.
4. Sub-section (2) of section 22 substituted by section 13, ibid, which was earlier as under:
"(2) The Board shall keep accounts of all receipts and expenditure in such form as may be
prescribed.
5. Sub-section (2) of section 23 substituted by section 14(a), ibid, which was earlier as under:
"(2) As soon as its accounts have been audited the Board shall send a copy thereof together with a
copy of the report of the auditor thereon to the State Government.
Page 134
th
4) The Board shall pay out of the Fund such sum as may be determined by the State
Government by way of fees 1[, if any,] for such audit.
24. Budget. (1) The Board shall prepare each year in such form and within such time, as
may be prescribed, a budget in respect of the financial year next ensuing, showing the
estimated receipts and expenditure and shall forward a copy of the same to the State
Government for approval.
(2) The State Government may, in according such approval, make such additions,
alterations, and modifications therein as it thinks fit:
period as may be prescribed.
25. Penalty. Any person who
(a) fails to file the statement referred to in section 16 within the prescribed period, or files a
false statement, or
(b) fails to produce the accounts, registers or documents or to furnish the information
relating thereto when so required under2[section 17, or]
3[(c) fails to comply with the provisions of section 16,] shall be punishable with simple
imprisonment which may extend to six months or with fine which may extend to one
thousand rupees or with both and when the offence is a continuing one, with a daily fine
not exceeding fifty rupees per day during the period of continuance of the offence.
26. Employment of staff. The Board may employ such members of the staff 4[of the
Corporation or the Municipality or any other local authority, as the case may be,] having
jurisdiction over the area specified in the notification under sub-section (1) of section 9, on
such terms and conditions of service as may be determined by regulation:
Provided that the terms and conditions of service of the persons so employed shall not be
varied to their disadvantage.
5[26A.Delegation of powers and functions by Board. 6[(1) The Board may delegate any of
its powers and functions including financial powers
1. Inserted by section 14(b) of the West Bengal Central Valuation Board (Amendment) Act, 2002
(West Ben. Act XVII of 2002).
(West Ben. Act VII of 1994) for "section 17".
3. Inserted by section 12(b), ibid.
(West Ben. Act XVI of 1995) for "of the Corporation, Commissioner of the Municipality or any other
local authority, as the case may be".
6. Sub-section (1) substituted by section 15 of the West Bengal Central Valuation Board
(Amendment) Act, 2002 (West Ben. Act XVII of 2002), which was earlier as under:
"(1) The Board may delegate any of its powers and functions including financial powers to the
Member-Secretary of the Board except the power under sub-section (3) of section 6.
Page 135
th
to the Chairperson of the Board except the power under sub-section (1) of section 6.]
(2) The Board may also delegate any of its powers or functions to any other officers of the
Board by a resolution adopted by it in this behalf.]
1.Section 27 omitted by section 13 of the West Bengal Central Valuation Board (Amendment) Act,
1994 (West Ben. Act VII of 1994), which was earlier as under:
"27. Valuation Authority. (1) The State Government may in consultation with the Board, by
notification, constitute a Valuation Authority, for a municipality or group of municipalities in respect
of which no notification under sub-section (1) of section 9 has been made for the purpose of making
general valuation of lands and buildings in such municipality or group of municipalities.
(2) Where a notification under sub-section (1) of this section has been made, no notification under
subsection (1) of section 9 shall be made in respect of such municipality or group of municipalities.
(3) An Authority shall consist of a Chairperson and two other members to be appointed by the State
Government.
(4) (a) The Chairperson shall be a person who is or has been an officer of the State Government not
below the rank of Deputy Secretary.
(b) Of the two other members
(i) one shall be a person who is or has been a member of the judicial service for not less than seven
years, and
(ii) the other shall be a person holding a degree or diploma in Civil Engineering and having
knowledge and experience in the work of valuation and assessment for not less than seven years.
(5) The Chairperson and other members of an Authority shall hold office for such period not
exceeding six years as the State Government may determine and the terms and conditions of their
service including salaries and allowances shall be such as may be prescribed.
(6) In making valuation of lands and buildings within a municipality or group of municipalities the
Authority constituted for that area shall follow the general directions of the State Government and
as nearly as may be, the procedure laid down in this Act for the functioning of the Board, and the
provisions of sections 8,9,10,11,12,13,14,15,16,17,18, 21, 22, 23, 25, 26 and 29 shall mutatis
mutandis apply to such Authority.
(7) The Commissioners of a municipality shall in each year pay to the Authority such proportion of
the expenditure incurred by that Authority on account of valuation and assessment of a municipality
or group of municipalities as the annual value of holdings of the concerned municipality bears to the
aggregate of the annual value of total number of holdings in the municipality or group of
municipalities, as the case may be.
(8) An Authority shall determine the amount payable by a municipality or group of municipalities
under sub-section (7) and may require the Commissioners of such municipality or group of
municipalities to pay the amount within such time as may be prescribed.
(9) If the amount payable under sub-section (8) is not paid within the prescribed time, an Authority
may refer the matter to the State Government and the State Government may pay the amount to
that Authority after deducting that amount from any grant payable by the State Government to such
Commissioners of a municipality or group of municipalities, as the case
(10) Every Authority shall have a fund to be called the Valuation Authority Fund bearing the name of
the municipality or group of municipalities in respect of which it is constituted and to which shall be
credited
(a) such moneys as may be paid to such Authority by the municipality or group of municipalities
under subsection (7), and
(b) such other moneys as may be paid to such Authority by the State Government or any other
agency.
Page 136
th
[Footnote continued to next page]
27A. Members, officers and employees to be public servants.

Every member of the Board or every officer or employee of the Board shall, when acting or
purporting to act under the provisions of this Act, be deemed to be a public servant within
the meaning of section 21 of the Indian Penal Code (45 of 1860).
28. Power to make rules. (1) The State Government may, by notification, make rules for
carrying out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules
may provide for all or any of the matters, which may be or is required to be prescribed.
29. Power to make regulations.(1) The Board may, with the previous approval of the
State Government, make regulations consistent with the provisions of this Act and the rules
made there under for carrying out the purposes of this Act.
(2) The State Government may, in according such approval, make such additions, alterations
and modifications therein as it thinks fit:
period not exceeding two months as may be specified by the State Government.
(3) All regulations approved by the State Government shall be published in the Official
Gazette.
[Footnote continued from previous page]

(11) All moneys received by an Authority shall be deposited in one or more nationalized banks.
(12) All expenditure incurred by an Authority shall be defrayed out of the fund of such Authority.
(13) Every Authority shall prepare in each year in such form and within such time as may be
prescribed a budget in respect of the financial year next ensuring, showing the estimated receipts
and expenditure of that Authority and shall forward a copy of the same to the State Government for
approval and while according such approval the State Government may make such additions,
alterations and modifications therein as it thinks fit:
Provided that before making such additions, alterations and modifications, the State Government
shall give the Authority an opportunity to express its views thereon within such period as may be
prescribed.
(14) With effect from the date from which valuation made by an Authority becomes operative in any
area the provisions of the Bengal Municipal Act, 1932 (Bengal Act XV of 1932) or any other law
relating to any of the matters provided for in this section shall be deemed in respect of such area to
have been modified to the extent to which provisions have been made in this section.
(15) The State Government may, if it considers it necessary so to do, by notification, dissolve an
Authority constituted under sub-section (1) and upon such dissolution the power of the municipality
concerned to make valuation of lands and buildings shall notwithstanding anything contained in this
Act, revive.
(16) When an Authority is dissolved under sub-section (15)
(/) if it is in respect of a municipality, the assets and liabilities of that Authority, shall devolve upon
such municipality; or
(ii) if the Authority is in respect of a group of municipalities the assets and liabilities of that Authority
shall devolve upon such municipalities, In the manner prescribed.".
Page 137

Operationalising The 13 Finance Commission Recommendations: A Compendium of Legislations & Practices

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Operationalising The 13 Finance Commission Recommendations: A Compendium of Legislations & Practices

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NIUA

National Institute of Urban Affairs

Ministry of Urban Development

Administrative Staff College of India

A Compendium of Legislations & Practices

Under the Aegis of

Ministry of Urban Development, Govt. of India

Administrative Staff College of India

National Institute of Urban Affairs

13 FC- Operationalising the Recommendations - ULBs

A Compendium of Legislations & Practices

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

Supplement to Budget on Local Bodies

Audit System in Local Bodies

Independent Local Body Ombudsmen

Electronic Transfer of Grants

Prescription of Qualifications to SFC members

Levy of Property Tax without Hindrance

State Property Tax Board

Standardised Service Level Benchmarks

Fire-hazard Response and Mitigation Plan

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

13 FC- Operationalising the Recommendations - ULBs

13 FC- Operationalising the Recommendations - ULBs

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

Table 1.1. Conditionality and Compliance Mechanism

8. State government must gradually put in

1. Submission of relevant supplement to the budget

1. Passage of legislation on Local Body Ombudsman and its

1. Certification by the state government that the hindrances

1. Passage of legislation or issue of instructions for the

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

13 FC- Operationalising the Recommendations - ULBs

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

Table 1.2 Current Practices Relating to 13th FC Conditions

3. The state government must put in place a

Legislations and Practices

9. All municipal corporations with a

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

2. Supplement to Budget on Local Bodies

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

The Budget Provisions to Municipalities and Municipal Corporations in 2010-11 for

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

3. Audit System in Local Bodies

13 FC- Operationalising the Recommendations - ULBs

13 FC- Operationalising the Recommendations - ULBs

13 FC- Operationalising the Recommendations - ULBs

13 FC- Operationalising the Recommendations - ULBs

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

Administrative Staff College of India

13 FC- Operationalising the Recommendations - ULBs

4. Independent Local Body Ombudsmen