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Gram Panchayats in India and Role of Gram Sabha
Own Sources of Revenue (Tax & NonTax)
Three decades have passed since the 73rd and 74th Constitutional Amendments Acts came into effect, which envisaged that local bodies in India would function as institutions of local self-government.
As a follow up, the Ministry of Panchayati Raj was constituted in 2004 to strengthen rural local governments.
Avenues for Own Source of Revenue
The report of the expert committee constituted by the Ministry of Panchayati Raj on own source of revenue (OSR) of rural local bodies elaborates on the details of State Acts that have incorporated tax and non-tax revenue that can be collected and utilised by panchayats.
1. Property tax
2. Cess on land revenue
3. Surcharge on additional stamp duty
4. Tolls, tax on profession,
5. Advertisement,
6. User charges for water and sanitation and lighting
are the major OSRs where panchayats can earn maximum income.
Panchayats are expected to establish a conducive environment for taxation by implementing appropriate financial regulations.
This includes making decisions regarding the tax and non-tax bases, determining their rates, establishing provisions for periodic revisions, defining exemption areas, and enacting effective tax management and enforcement laws for collection
The huge potential for non-tax revenue includes:
1. Fees
2. Rent
3. Income from investment sales and hires charges and receipts.
4. Rural business hubs
5. Innovative commercial ventures
6. Renewable Energy Projects
7. Carbon Credits
8. Corporate Social Responsibility (CSR) funds and Donations.

The role of Gram Sabhas
Gram Sabhas have a significant role in fostering self-sufficiency and sustainable development at the grass-roots level by leveraging local resources for revenue generation.


They can be engaged in
1. Planning
2. Decision-making
3. Implementation of revenue-generating initiatives that range from agriculture and tourism to small-scale industries.

4. They have the authority to impose taxes, fees, and levies, directing the funds towards local
5. development projects, public services, and social welfare programmes.

Through transparent financial management and inclusive participation, gram sabhas ensure accountability and foster community trust, ultimately empowering villages to become economically independent and resilient.
Thus, gram sabhas need to promote entrepreneurship, and foster partnerships with external stakeholders to enhance the effectiveness of revenue generation efforts

In several States, gram panchayats lack the authority to collect taxes, while in numerous others, intermediate and district panchayats are not delegated the responsibility of tax collection.
When gram panchayats collect 89% of own taxes, the intermediate panchayats collect 7% and the district panchayats a nominal amount of 5%.
There is a need to demarcate OSR for the entire three-tier panchayats to ensure equitable sharing.

Overcoming the Dependency Syndrome
• Despite every enabling factor to raise revenue, panchayats confront several impediments in
resource mobilization: the ‘freebie culture’ rampant in society is the cause for the antipathy
in paying taxes.
• Elected representatives feel that imposing taxes would alter their popularity adversely.
• Here, the answer is clear. There is a need to educate elected representatives and the
public on the significance of raising revenue to develop panchayats as self-governing institutions.
• Ultimately, the dependency syndrome for grants has to be minimized and in due course, panchayats will be able to survive on their own resources.
• Panchayats can only achieve such a state of affairs when there are dedicated efforts in all tiers of governance, which includes even the State and central level.