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CS Professional · CSR and Social Governance · Local Self Governance

A Municipal Council has an Auditor-appointed statutory audit and also wants to raise resources. The Council Chairperson claims the Municipality may levy and collect any tax it likes, even if the State law is silent. Applying the constitutional provisions on municipal finance, which is correct?

A Municipality can levy taxes, duties, tolls and fees only if and as authorised by State law, within the limits laid down. It has no inherent taxing power, and Parliament's approval is not needed. Municipalities are not confined to grants alone.

  1. AThe Municipality may levy taxes, duties, tolls and fees only as authorised by State law and within its limitsCorrect
  2. BThe Municipality has inherent power to tax under the Constitution, independent of State law
  3. CMunicipalities may levy taxes only with Parliament's approval
  4. DMunicipalities can only receive grants and cannot levy any tax

Explanation

The State Legislature may by law authorise a Municipality to levy, collect and appropriate taxes, duties, tolls and fees, subject to procedures and limits it specifies. The power is therefore derived from State law, not inherent. Option about only grants is wrong because taxation is permitted when authorised, and Parliament has no role.

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