Previous Year Question
Which of the following taxes is levied by the Gram Panchayats?
Sales Tax
Land Revenue Tax
Tax on Local Fairs
None of the above
Correct Answer: C
Detailed Solution
Panchayats do not possess an unlimited constitutional power to impose any tax on their own. Under Article 243H, the State Legislature may by law authorise a Panchayat to levy, collect and appropriate specified taxes, duties, tolls and fees. Therefore, the actual taxation powers of Panchayats depend upon the respective State Panchayati Raj laws.
Among the local revenue sources of Gram Panchayats, hats, markets and fairs have traditionally been important. State Panchayat laws may provide for taxes or fees on persons selling goods in markets, hats or fairs under the control of a Gram Panchayat. Government studies also record revenue heads such as tax on fairs, festivals and other entertainments for Village Panchayats.
In the Panchayat framework of Uttar Pradesh as well, the management of hats, bazaars and melas falls within the sphere of the Gram Panchayat. The relevant legal framework provides for local dues/taxes connected with markets, hats and melas under its control.
Sales Tax was not an ordinary Gram Panchayat tax; it belonged to the wider State taxation system. Similarly, Land Revenue is fundamentally associated with the State revenue system. A Panchayat law may prescribe a separate Panchayat tax calculated with reference to land revenue, but that is not the general “Land Revenue Tax” referred to in this option.