THE TAMIL NADU PANCHAYATS ACT, 1994
(Tamil Nadu Act 21 of 1994)
TAXATION AND FINANCE
167. Local Cess.- (1) There shall be levied in every Panchayat Development block, a Local Cess at the rate of 1[two rupees] on every rupee of land revenue payable to the Government in respect of any land for every Fasli.
Explanation.- In this section and in Section 168, ‘land revenue’ means public revenue due on land and includes water cess payable to the Government for water supplied or used for the irrigation of lands, royalty, lease amount or other sum payable to the Government in respect of land held direct from the Government on lease or licence, but does not include any other cess or the surcharge payable under Section 168:
Provided that land revenue remitted shall not be deemed to be land revenue payable for the purpose of this Section.
(2) The Local Cess payable under sub-section (1) shall be deemed to be public revenue due on all the lands in respect of which a person is liable to pay Local Cess and all the said lands, the buildings upon the said lands and their products shall be regarded as security for the Local Cess.
(3) The provisions of the Tamil Nadu Revenue Recovery Act, 1864 (Tamil Nadu Act II of 1864), shall apply to the payment and recovery of the Local Cess payable under this Act just as they apply to the payment and recovery of the revenue due upon the lands in respect of which the Local Cess under this Act is payable.
168. Local Cess Surcharge.- Every Panchayat Union Council may levy on every person liable to pay land revenue to the Government in respect of any land in the Panchayat Union, a Local Cess Surcharge at such rate as may be considered suitable as an addition to the Local Cess levied in Panchayat Development Block under Section 167:
Provided that the rate of Local Cess Surcharge so levied shall not be less than 1[seven rupees] and not more than ten rupees on every rupee of land revenue payable in respect of such land.
(a) regulate the collection of Local Cess under Section 167, Local Cess Surcharge under Section 168 and Surcharge on the Duty on transfers of property under Section 175;
(b) fix the proportions in which the proceeds of Local Cess, Local Cess Surcharge and Surcharge on the Duty on transfers of property shall be distributed among Village Panchayats, Panchayat Union Councils and District Panchayats and grant any amount from the said proceeds for the execution of specific scheme, project, programme or plan in any Village Panchayat, Panchayat Union Council or District Panchayat; and
(c) deduct the expenses incurred by the Government in the collection of Local Cess, Local Cess Surcharge and Surcharge on the Duty on transfers of property.]
A Duty shall also be levied in every
(3) Subject to such rules as may be prescribed and with the sanction of the Inspector and subject to such restrictions and conditions, if any, as may be imposed by him either at the time of granting sanction or later, the Village Panchayat may also levy in the village, a tax on agricultural land for a specific purpose.
172. House tax.- The house tax shall be levied on all houses in every Panchayat Village on the basis on which such tax was levied in the local area concerned immediately before the commencement of this Act or on the basis of classified plinth area at the rates specified in Schedule I, as the Village Panchayat may adopt subject to the provisions of sub-section (3).
(2) The house tax shall, subject to the prior payment of the land revenue, if any, due to the Government in respect of the site of the house, be a first charge upon the house and upon the movable property, if any, found within or upon the same and belonging to the person liable to such tax.
(3) The Government shall, by notification, determine in regard to any Panchayat Village or any class of Panchayat Villages whether the house tax shall be levied every half-year or year and in so doing have regard to the following matters, namely:-
(a) the classification of the local areas under Section 4;
(b) the annual receipts of the Village Panchayat;
(c) the population of the
(d) such other matters as may be prescribed.
(4) The Government may make *rules providing for-
(a) the persons who shall be liable to pay the tax and the giving of notices of transfer of houses;
(b) the grant of vacancy and other remissions;
(c) the circumstances in which and the conditions subject to which, houses constructed, reconstructed or demolished, or situated in areas included in, or excluded from the Panchayat Village during any half year or year, shall be liable or cease to be liable to the whole or any portion of the tax.
(5) If the occupier of a house pays the house tax on behalf of the owner thereof, such occupier shall be entitled to recover the same from the owner and may deduct the same from the rent then or thereafter due by him to the owner.
1[172-A. Levy and collection of advertisement tax.- Every person who erects, exhibits, fixes or retains upon or over any land, building, wall, hoardings or structure any advertisement, or who displays any advertisement to public view in any manner whatsoever in any place whether public or private, in the Panchayat Village shall pay on every advertisement which is so erected, exhibited, fixed, retained or displayed to public view, a tax calculated at such rates and in such manner as the 3[collector may], determine in accordance with such rule *as may be prescribed.
Provided that the rates shall be subject to the rates that may be prescribed by the Government and different rates may be prescribed for different Village Panchayats taking into consideration the location, the size of the advertisement board, the period and the types of advertisements:
Provided further that no tax shall be levied under this Section on any advertisement or a notice-
(a) of a public meeting; or
2[(b) of an election to the Parliament, Legislative Assembly or a Panchayat; or]
(c) of a candidature in respect of such an election:
Provided also that no such tax shall be levied on advertisement which is not a sky-sign and which-
(a) is exhibited within the window of any building; or
(b) relates to the trade or business carried on within the land or building upon or over which such advertisement is exhibited, or to any sale or letting of such land or building or any effects therein or to any sale, entertainment or meeting to be held upon or in the same; or
(c) relates to the name of the land or building upon or over which the advertisement is exhibited, or to the name of the owner or occupier of such land or building; or
(d) relates to the business of any railway administration; or
(e) is exhibited within any railway station or upon any wall or other property of a railway administration except any portion of the surface of such wall or property fronting any street.
Explanation.- For the purpose of this action.-
(i) the expression “structure” shall include any movable board on wheels used as an advertisement or an advertisement medium;
(ii) the expression “sky-sign” shall means any advertisement supported on or attached to any post, pole, standard, frame-work or other support wholly or in part upon or over any land, building, wall or structure which, or any part of sky-sign which shall be visible against the sky from some point in any public place and includes all and every part of any such post, pole, standard, frame-work or other support. The expression “Sky-sign” shall also include any balloon, parachute or other similar device employed wholly or in part or the purposes of any advertisement upon or over any land, building or structure or upon or over any public place but shall not include-
(a) any flag staff, pole vane or weather-cock, unless adopted or used wholly or in part for the purpose of any advertisement, or
(b) any sign, or any board, frame or other contrivance securely fixed to or on the top of the wall or parapet of any building or on the cornice or blocking of any wall, or to the ridge of a roof:
Provided that such board, frame or other contrivance shall be of one continuous face and not open work, and does not extend in height more than one metre above any part of the wall, or parapet, or ridge to, against or on, which it is fixed or supported, or
(c) any advertisement relating to the name of the land or building upon or over which the advertisement is exhibited, or to the name of the owner or occupier of such land or building, or
(d) any advertisement relating exclusively to the business of a railway administration and placed wholly upon or over any railway, railway yard station, platform or station approach belonging to a railway administration, and so placed that cannot fall in any street or public, or
(e) any notice of land or building to be sold, or let placed upon such land or building;
(iii) the expression “public place” means any place which is open to the use and enjoyment of the public whether it is actually used or enjoyed by the public or not;
(iv) the expression “advertisement” shall not include any advertisement published in any newspaper.
172-B. Prohibition of advertisements.- No advertisement shall after the levy of tax under Section 172-A as determined by the 4[collector] be erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding or structure within the Panchayat Village, or shall be displayed in any manner whatsoever in any place except in accordance with the rules made under this Act:
that the 4[collector] shall regulate the height of the advertisement in
further that the Government may, by notification, prohibit advertisements in
any place within any
1. Substituted for the words “Section 171 and 172” by Tamil Nadu Act 32 of 1999.
(a) in the form of a surcharge on the Duty imposed by the Indian Stamp Act, 1899 (Central Act II of 1899), as in force for the time being in the State of Tamil Nadu, on every instrument of the description specified below, which relates to immovable property situated in the area under the jurisdiction of a Village Panchayat; and
(b) at such rate, as may be fixed by the Government, not exceeding five per centum on the amount specified below against each instrument:-
(2) On the introduction of the Duty aforesaid-
(a) Section 27 of the said Indian Stamp Act shall be read as if it specifically required the particulars to be set forth separately in respect of property
situated in the areas under the jurisdiction of Village Panchayat and in respect of property situated outside such area;
(b) Section 64 of the said Act shall be read as if it referred to the Village Panchayat as well as the Government.
3[175-A. Apportionment of Entertainment Tax among Panchayats.- Notwithstanding anything contained in Section 13 of the Tamil Nadu Entertainments Act, 1939 (Tamil Nadu Act X of 1939) so far as Panchayats are concerned, ten per cent of the proceeds of the tax under Section 4, Section 4-F and Section 4-H of that Act collected every year shall be credited to the Government and the balance of ninety percent shall be distributed among Village Panchayats, Panchayat Union Councils and District Panchayats in such proportions as the Government may fix.]
176. Exemption.- No exemption from the payment of any surcharge or tax specified in Section 168 or 171 shall be granted by the Village Panchayat or the Panchayat Union Council except in accordance with such rules as may be prescribed:
Provided that in any particular case, such exemption may be granted with the previous sanction of the Government.
177. Power to require land revenue staff to collect taxes and fees due to Village Panchayats.- Subject to such rules as may be prescribed, the Executive Authority or the Commissioner shall have power to require the staff of the Land Revenue Department to prepare at quinquennial intervals a House-Tax Assessment Register in such form as may be prescribed and to collect any tax or fee due to the Village Panchayat or Panchayat Union Council on payment of such remuneration not exceeding 61/4 percent of the gross sum collected as the Collector may, by general or special order, determine.
178. Write-off of irrecoverable amounts.- Subject to such restrictions and control as may be prescribed, a Village Panchayat or Panchayat Union Council may write off any tax, fee or other amount whatsoever due to it, whether under a contract or otherwise, or any sum payable in connection therewith, if in its opinion such tax, fee, amount or sum is irrecoverable:
Provided that where the Collector or any of his subordinates is responsible for the collection of any tax, fee or other amount due to a Village Panchayat or Panchayat Union Council the power to write off such tax, fee or amount or any sum payable in connection therewith, on the ground of its being irrecoverable, shall be exercised by the Commissioner of Land Administration or subject to his control, by the Collector or any officer authorised by him.
The total amount of expenditure approved by the Government for being debited to the Panchayat Union (Education) Fund shall be divided into slabs in the manner specified below:-
So much of the expenditure as may be equal to the land revenue assignment of the block referred to in section 170 shall constitute the first slab.
So much of the expenditure as may be in excess of the first slab subject to a maximum of 250 paise for each individual of the population of the panchayat development block concerned shall constitute the second slab.
To each Panchayat Union Council, the Government shall make a Local Education Grant which shall be a proportion of the second slab not less than fifty per cent and not more than eighty per cent as may be specified by the Government in respect of that block.
181. Classification of Panchayat Development Blocks.- For the purpose of sanctioning grants to Panchayat Union Council, the Government may classify Panchayat Development Blocks in such manner as they may deem fit once in every five years and it shall be open to the Government to sanction grants at varying rates for the different classes of Panchayat Development Blocks. It shall also be open to the Government to revise the classification of Panchayat Development Blocks once in every five year.
1[181-A. Deposit of fund of Panchayat.- Any Panchayat having surplus fund shall, with the prior approval of the Inspector, deposit such surplus fund in any of the financial institutions specified by the Government:
Provided that no such deposit shall be made when there is need to utilise this fund for administration or development work during the next twelve months.
181-B. Grant or loan for scheme or project.- (1) The Government may make grant or loan to a Panchayat for the execution of specific scheme, project, programme or plan relating to any of the matters administered by such Panchayat subject to such terms and conditions as may be prescribed.
(2) Such Panchayat shall utilize such grant or loan only for the purpose for which such grant or loan is given.
(3) The provisions of the Local Authorities Loans Act, 1914 (Central Act IX of 1914), shall apply in respect of the loan given by the Government under this section.
181-C. Raising of loan by Panchayat.- Every Panchayat shall be competent to raise loan in full or in part from any Financial Institution or agency or bank for any of the following purposes, subject to the conditions imposed by the Government in this behalf, namely:-
(a) to carry out any of the works connected with the improvement and development of infrastructure in Panchayat areas;
(b) to carry out relief works at the time of natural calamities;
(c) to undertake any measure in connection with, or ancillary to the above purposes; and
(d) to carry out any of its other statutory functions.
181-D. Procedure for inter-panchayats lending.- (1) Any Panchayat may raise loan from any other Panchayat and any Panchayat may sanction loan to another Panchayat to carry out any of its statutory functions or for the creation of capital assets or income generating assets, with the prior sanction of the Inspector.
(2) The procedure for the receipt, utilization and repayment of the loan under this section and Section 181-C shall be subject to such terms and conditions, as may be agreed upon by the Financial Institution or agency or bank or lending Panchayat, as the case may be, and the borrowing Panchayat. Every Panchayat shall maintain in respect of the loan, such books of accounts, as may be prescribed.
(3) Every Panchayat shall utilize the loan only for the purposes for which such loans are borrowed.]
182. 1[***] ; 183. 1[***] ; 184. 1[***]
(a) for each Panchayat Union, a Panchayat Union (General) Fund and a Panchayat Union (Education) Fund;
(b) for each Village Panchayat, a Village Panchayat Fund.
2[(b) The proportionate share of the proceeds of the Local Cess, Local Cess Surcharge, Surcharge on the Duty on transfers of property and Entertainments Tax received by the Panchayat Union Council under Sections 169 and 175-A;]
(e) fees on licences issued and permissions given by the Panchayat Union Councils;
(f) fees levied in public markets classified as Panchayat Union markets after deducting the contribution, if any, paid by the Panchayat Union Council to the Village Panchayat on the scale fixed by the Government;
(g) the contribution paid to the Panchayat Union Council by Village Panchayats in respect of markets classified as Village Panchayat markets;
(h) fees for the temporary occupation of roads or road margins;
(i) fees for the use of choultries;
(j) receipts from dispensaries maintained by the Panchayat Union Council;
(k) income from endowments and trusts under the management of the Panchayat Union Council;
(l) 4[***] ;
(m) contributions from Government, other Panchayat Union Councils, municipalities, other local authorities and persons in aid of every institution or service maintained or financed from Panchayat Union funds or managed by the Panchayat Union Council;
(n) sale-proceeds of tools and plants, stores and materials and of trees and avenue produce appertaining to Panchayat Union roads;
(o) income from Panchayat Union ferries and fisheries;
(p) interest on loans and securities;
(q) interest on arrears of revenue;
(r) income from and sale-proceeds of, buildings, lands and other property belonging to the Panchayat Union Council;
(s) unclaimed deposits and other forfeitures;
(t) fines and penalties levied under this Act by the Panchayat Union Council or at its instance or on its behalf;
(u) all sums other than those enumerated above or in Section 187 which arise out of, or are received in aid of, or for expenditure on, any institutions or services maintained or financed from the Panchayat Union funds or managed by the Panchayat Union Council;
(v) all other moneys received by the Panchayat Union Council.
Before omission it was as follows: “(a) the Local Cess Surcharge Matching Grant paid by the Government under Section 180; (d) the Local Roads Grant paid by the Government under Section 182.”
4. Clause (l) omitted by Tamil Nadu Act 23 of 2007 w.e.f. 8th June, 2007.
Before omission it was as follows: “(l) the proportionate share of the proceeds of the Entertainments Tax received by the Panchayat Union Council under Section 13 of the Tamil Nadu Entertainments Tax Act, 1939 (Tamil Nadu Act X of 1939);
(b) the land revenue assignment paid by the Government under Section 170;
(c) the Local Education Grant paid by the Government;
(d) such contribution from the Panchayat Union (General) Fund as the Government may decide to be necessary in any year in order to balance the budget of the Fund for that year;
(e) all fines and penalties levied within the jurisdiction of the Panchayat Union Council under he provisions of the Tamil Nadu Elementary Education Act, 1920 (Tamil Nadu Act VIII of 1920);
(f) all income derived from any endowments or other property owned or managed by the Panchayat Union Council for the benefit of elementary education;
(g) all other sums which may be contributed or received by the Panchayat Union Council for the purposes of elementary education.
“(a) twenty per cent of the local cess collected under Section 167;”.
2[(a) the house-tax and any other tax or any cess or fees levied under sections 171 and 172;]
3[(b) the profession tax levied by Village Panchayats under Chapter IX-A;]
5[(d) the proportionate share of the proceeds of the local cess, local cess surcharge, surcharge on the duty on transfers of property and entertainment tax received by the Village Panchayat under Sections 169 and 175-A;]
(f) the taxes and tolls levied in the village under Sections 117 and 118 of the Tamil Nadu Public Health Act, 1939 (Tamil Nadu Act VIII of 1939);
(g) fees levied in public markets classified as Village Panchayat markets after deducting the contributions, if any, paid by the Village Panchayat to the Panchayat Union Council on the scale fixed by the Government;
(h) the contribution paid to the Village Panchayat by Panchayat Union Councils in respect of markets classified as Panchayat Union markets;
(i) fees for the temporary occupation of village
sites, roads and other similar public places or parts thereof in the
(j) fees levied by the Village Panchayat in pursuance of any provisions of this Act or any rule or order made thereunder;
(k) income from endowments and trusts under the management of the Village Panchayat;
(l) the net assessment on service inams which are resumed by the Government;
(n) income derived from
(o) income derived from ferries under the management of the Village Panchayat;
(p) unclaimed deposits and other forfeitures;
(q) a sum equivalent to the seigniorage fees collected by the Government every year
from persons permitted to quarry for road materials in the
(r) all income derived from porambokes the user of which is vested in the Village Panchayat;
(t) income from leases of Government property obtained by the Village Panchayat;
(u) fines and penalties levied under this Act by the Village Panchayat or at the instance or on behalf of the Village Panchayat;
(v) all sums other than those enumerated above which arise out of, or are received in aid of or for expenditure on any institutions or services maintained or financed from the Village Panchayat fund or managed by the Village Panchayat;
8[(w) such other moneys as may be specified by the Government.]
9[(2) Notwithstanding anything contained in sub-section (1), the Government may direct any Village Panchayat to constitute separate funds to which shall be credited such receipt as may be specified and such funds shall be applied and disposed of in such manner as may be prescribed.
(3) Subject to such general control as the Village Panchayat may exercise from time to time, all cheques for payment from Village Panchayat Fund 10[***] shall be signed jointly by the President and Vice President and in the absence of the President or Vice President, as the case may be, by the Vice President or the President and another member authorised by the Village Panchayat at a meeting in this behalf.]
2. Substituted for the words “the house-tax, the vehicle-tax and any other tax or any cess or fee, levied under Sections 171 to 173” by Tamil Nadu Act 29 of 1995.
3. Substituted for the following clause (b) by Tamil Nadu Act 30 of 1999:
“(b) the profession tax levied by Village Panchayats under the Tamil Nadu Tax on Professions, Trades, Callings and Employments Act, 1992 (Tamil Nadu Act 24 of 1992);”
4. The following clause (c) “the proceeds of the duty on transfers of property levied under Section 175” omitted by Tamil Nadu Act 23 of 2007 w.e.f. 8th June, 2007.
5. Clause (d) substituted by Tamil Nadu Act 23 of 2007 w.e.f. 8th June, 2007.
6. The following clause (e) “in respect of Village Panchayat Fund, the Village House Tax Matching Grant” omitted by Tamil Nadu Act 30 of 1999.
7. Clause (m) omitted by Tamil Nadu Act 23 of 2007 w.e.f. 8th June, 2007. Before omission it was as follows:-
(m) the proportionate share of the proceeds of the Entertainments Tax received by the Village Panchayat under Section 13 of the Tamil Nadu Entertainments Tax Act, 1939 (Tamil Nadu Act X of 1939);
8. Substituted for the expressions: “all other moneys received by the Village Panchayat.” vide Tamil Nadu Act 25 of 2007 w.e.f. 8th June, 2007.
9. Sub-section (2) and (3) were added by Tamil Nadu Act 54 of 1997.
10. The words “or other funds constituted under sub-section (2)” were omitted by Tamil Nadu Act 25 of 2007 w.e.f. 8th June, 2007.
189. District Panchayat (General) Fund.- (1) There shall be constituted for each District Panchayat, a District Panchayat (General) Fund and the following shall form a part of, or be paid into, the District Panchayat (General) Fund, namely:-
(a) the amount transferred to the District Panchayat (General) Fund by appropriation from out of the Consolidated Fund of the State;
(b) all grants, assignments, loans and contributions made by the Government;
(c) all rents from lands or other property of the District Panchayat;
(d) all interests, profits and other money accruing by gift, grants, assignments or transfer from private individuals or institutions;
(e) all proceeds of land, security and other properties sold by the District Panchayat;
(f) all fees and penalties paid to or levied by or on behalf of the District Panchayat under this Act;
(g) all sums received by or on behalf of the District Panchayat by virtue of this Act.
(2) The Government shall make a grant to every District Panchayat (General) Fund, to cover the expenses of establishment at such scale as may be determined by it.
190. Application of moneys received and expenditure from funds.- All moneys received by the Panchayat Union Council and the Village Panchayat shall be applied and disposed of in accordance with the provisions of this Act and other laws:
Provided that the Panchayat Union Council or the Village Panchayat shall have power subject to such rules as may be prescribed to direct that the proceeds of any tax or additional tax levied under this Act shall be earmarked for the purpose of financing any specific public improvement. A separate account shall be kept of the receipts from every such tax or additional tax and the expenditure thereof.
191. Expenditure from Village Panchayat Fund and Panchayat Union Fund.- (1) The purposes to which the funds of the Panchayat Union Council or of the Village Panchayat may be applied include all objects expressly declared obligatory or discretionary by this Act or any Rules made thereunder or by any other laws or Rules and the funds shall be applicable thereto within the Panchayat Development Block or the Panchayat Village, as the case may be, subject to such rules or special orders as the Government may prescribe or issue and shall, subject as aforesaid be applicable to such purposes outside the Panchayat Development Block or Panchayat Village if the expenditure is authorised by this Act or specially sanctioned by the Inspector.
(2) It shall be the duty of every Panchayat Union Council and Village Panchayat to provide for the payment of-
(a) any amount falling due on any loans contracted by it;
(b) the salaries and allowances and the pensions, pensionary contributions and provident fund contributions of its officers and servants;
(c) sums due under any decree or order of a Court; and
(d) any other expenses rendered obligatory by or under this Act or any other law.
A Panchayat Union Council or Village Panchayat may, with the sanction of the
Government, contribute to any fund for the defence of
(4) A Panchayat Union Council or Village Panchayat, may with the sanction of the Inspector also-
(a) contribute towards the expenses of
any public exhibition, ceremony or entertainment in the Panchayat Development
(b) contribute to any charitable fund, or to the funds of any institution for the relief of the poor or the treatment of disease or infirmity or the reception of indisposed or infirm persons or the investigation of the causes of disease; and
(d) defray any other extraordinary charges.
192. Preparation and sanction of budgets.- (1) The Executive Authority of the Village Panchayat and the Commissioner shall in each year frame and place before the Village Panchayat or the Panchayat Union Council, as the case may be, a budget showing the probable receipts and expenditure during the following year.
(2) The budget of a Village Panchayat or Panchayat Union Council shall after preparation by the Executive Authority or the Commissioner, be submitted on or before such date and to such officer as may be prescribed and if the prescribed officer is satisfied that adequate provision has not been made therein for the performance of any necessary service or services, he shall have power to return the budget for modification in such manner as may be necessary to secure such provision.
(3) The Village Panchayat or the Panchayat Union Council, as the case may be, shall sanction the budget with such modification as it thinks fit. If there is a difference of opinion between the officer referred to in sub-section (2) and the Village Panchayat and the Panchayat Union Council, as the case may be, the budget shall be referred to the Inspector in the case of Village Panchayat and the Government in the case of the Panchayat Union Council. The Inspector or the Government, as the case may be, shall have power to modify the budget in such manner as he or they may consider necessary.
(4) If in the course of a year, a Village Panchayat or Panchayat Union Council finds it necessary to alter the figures shown in the budget with regard to its receipts or to the distribution of the amounts to be expended on the different services undertaken by it, a supplemental or revised budget may be framed, sanctioned, submitted and modified in the manner provided in sub-section (1) and (2):
Provided that no such alteration shall be given effect to except with the consent of the prescribed officer.
(5) On or before such date in each year as may be prescribed, every Commissioner shall submit to the Government through such officer and in such forms as may be prescribed a budget for the ensuing financial year showing the income and expenditure relating to the Panchayat Union (Education) Fund.
(6) The Government may pass such orders as they think fit in respect of the budget referred to in sub-section (5) and the Panchayat Union Council concerned shall be bound to carry out all such orders.
(7) The accounts of the Panchayat Union (Education) Fund shall be examined and audited by an Auditor appointed by the Government under Section 193 and the Panchayat Union Council concerned shall carry out any instruction which the Government may issue on the audit report.
193. Appointment of Auditors.- (1) The Government shall appoint auditors for the accounts of the receipts and expenditure of the funds of the Panchayat. Such auditors shall be deemed to be “public servants” within the meaning of Section 21 of the Indian Penal Code, 1860 (Central Act XLV of 1860).
1[(2) The Government may recover from the Panchayat, the expenditure incurred by the Government in the audit of the accounts of such Panchayat, at such percentage, of the expenditure as may be fixed by the Government.]
194. Contribution to expenditure by other local authorities.- If the expenditure incurred by the Government or by any Panchayat Union Council or by any Village Panchayat or by any other local authority in the State for any purpose authorised by or under this Act, is such as to benefit the inhabitants of the Panchayat Union or Panchayat Village, the Panchayat Union Council or the Village Panchayat, as the case may be, may, with the sanction of the Inspector, and shall, if so directed by him, make a contribution towards such expenditure.
(a) by order direct any person having custody of the funds of the Panchayat Union Council or the Village Panchayat to pay to them in priority to any other charges against such fund, except charges for the service of authorised loans, any loan or advance made by them to the Panchayat Union Council or the Village Panchayat for any purpose to which its funds may be applied under this Act;
(b) recover any such loan or advance by suit.
(2) The person to whom the order referred to in Clause (a) of sub-section (1) is addressed shall be bound to comply with such order.
196. Application of certain sections of this Act to District Panchayat.- The provisions of Sections 190, 191, 192, 194 and 195 (both inclusive) shall, in as far as may be, apply in relation to the District Panchayat as they apply in relation to Village Panchayat and Panchayat Union Council.
(a) any of the powers and functions of the Village Panchayat or Panchayat Union Council or of the Government; or
(b) any road, bridge, channel, building or other property movable, or immovable which is vested in the Village Panchayat or the Panchayat Union Council or the Government and which is situated in the district,
shall with the consent of the District Panchayat and subject to such exemption and conditions as the Government may make and impose, be exercised or placed under the control and administration of the District Panchayat for the purposes of this Act and thereupon such powers and functions and such road, bridge, channel, building or other property, shall be under the control and administration of the District Panchayat, subject to all exceptions and to all charges and liabilities affecting the same.
(2) It shall be competent for the Government by notification, to resume any of the powers and functions or property, placed under the control of the District Panchayat under sub-section (1), on such terms as the Government may determine.
198. Finance Commission.- (1) The Governor shall as soon as may be, after the commencement of this Act, but not later than 24th April 1994 and thereafter at the expiration of every fifth year, constitute a Finance Commission referred to in Article 243-I of the Constitution to review the financial position of the panchayats and to make recommendations to the Governor as to-
(a) the principles which should govern,-
(i) the distribution between the State and Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the Government which may be divided between them and allocation between the District Panchayats, Panchayat Union Councils and Village Panchayats of their respective shares of such proceeds;
(ii) the determination of the taxes, duties, tolls and fees which may be assigned to or appropriated by the Panchayats;
(iii) the grants-in-aid to the Panchayats , from the Consolidated Fund of the State;
(b) the measures needed to improve the financial position of the Panchayats;
(c) any other matter referred to the Finance Commission by the Governor in the interest of sound finance of the Panchayats.
(2) The Finance Commission shall consists of a Chairman and 1[Five other members].
(3) The Chairman and members of Finance Commission shall possess such qualifications and shall be appointed such manner as may be prescribed.
(4) The Finance Commission shall determine their procedure.
(5) The Chairman or a member of the Finance Commission may resign his office by writing under his hand and addressed to the Finance Secretary to the Government, but he shall continue in office until his resignation is accepted by the Governor.
(6) The casual vacancy created by the resignation of the member or Chairman under sub-section (5) or for any other reasons may be filled by the fresh appointment and a member or Chairman so appointed, shall hold office for the remaining period for which the member or Chairman in whose place he was appointed would have held office.
(7) The Finance Commission shall have the following powers in the performance of its functions, namely:-
(a) to call for any record from any officer or authority;
(b) to summon any person to give evidence or produce records; and
(c) such other powers as may be prescribed.
(8) The Finance Commission shall prepare a report on the activities of the Commission and submit the same to the Government at the end of each financial year.
(9) The Governor shall cause every recommendation made by the Finance Commission under this section together with an explanatory memorandum as to the action taken thereon to be placed in the table of the Legislative Assembly.