The Important Sources of Income of Urban Local Bodies:

1. Municipal corporations and municipalities raise their own resources from a variety of sources, as provided for in the respective municipal laws. Their own revenue sources are income from

(i) taxes.

(ii) fees and fines. And

(iii) earning from municipal enterprises like land, tanks, markets, shops, etc.

Besides these bodies receive grants from the State.

2. Property tax on land and buildings is the most important source of income of most urban local bodies. Other taxes levied by them are advertisement tax, professional tax, etc. Octroi still remains an important source of income of municipalities in Western India.

3. Now, the trend is towards abolishing this tax as it obstructs the free flow of traffic on highways. They also charge fines for breach of municipal rules and regulations. From municipal shops and markets and rest houses, municipalities often earn a considerable sum of revenue.

4. It is a general practice for States to give grants to their municipal bodies to improve their revenue position. State grants-in-aid may be on adhoc basis; or, it can be on the basis of certain principles like size of population, slums concentration, location of town, etc.

5. Some of the taxes and rates collected by urban bodies are:

- Property Tax; Water tax for water supplied; Scavenging Tax, Fire Tax; Taxes on animals and vehicles; Theatre Tax; Duty on transfer of Property; Octroi Duty on certain items brought into the city; Education Cess (Tax) and Professional Tax.

6. Some other sources of income are fines and fees such as: Fees on Tehbazari on takhats and chabutras; licence fees - on cycle rickshaw, bicycles etc.;rent from municipal shops; and fines imposed for violation of municipal bye-laws.