ULBs has substantially increased in recent years as shown in the table below.
Funds devolved (Rs. Crore)
As a result of recommendations of different Sate Finance Commissions, the devolution of funds to
category was on the basis of population and area (1991) with respective weightage of 80% and 20%. The State Government accepted this recommendation. With this, the flow of funds to ULBs has become regular and its distribution among ULBs has been rationalized and limited to objective criteria.
of the State Government should be transferred to ULBs the respective shares of Nagar Nigam, Nagar palika Parishads and Nagar panchayats were 3.12%, 3.12% and 0.76%. Inter-se distribution within each
The First State Finance Commission of U.P. has recommended that 7 percent of net tax receipts
In this context the Second State Finance Commission of U.P. has recommended that 7.5 percent
of tax receipts of the State Government should be transferred to ULBs the shares of Nagar Nigam, Nagar Palika Parishads and Nagar Panchayat are 3.20%, 3.20% and 1.1% respectively. Inter-se distribution within each category on the basis of population (2001), SC/ST Population, literacy, without drinking water supply, population, Area and effort of revenue collection with respective w ight age of 50%, 10%, 5%,
20% and 10%.
The Third State Finance Commission has been constituted in 2005, which was given the
responsibility to make recommendations regarding the distribution of the net proceeds of taxes, duties, tolls and fees levied by the state amongst the ULBs and PRIs. The commission after a lot of debate, discussion
and deliberation submitted its report to state government in August 2008.
The recommendations of the First Finance Commission regarding Property Tax which constitutes
the most important own source of revenue of ULBs, have been accepted by the state Government. In order to strengthen the financial position of the ULBs, an area based self assessment system of property tax has been introduced in residential buildings of Municipal Corporation Towns of the State in the first phase. Similarly, recommendations of Second Finance Commission regarding introduction of self assessment system on Non-Residential Building on the pattern of Bangalore Municipal Corporation has been accepted
by the State Government and rules are being framed.
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