Tax Administration Of The Third Tier: A Study Of Two Districts Of West Bengal

The 73rd Constitutional Amendment Act has entrusted Panchayati Raj Institutions (PRIs) (Third Tier) with a wide range of responsibilities. Discharging these responsibilities requires an adequate tax administration. But even prior to this amendment, tax administration of the panchayat bodies were not strong enough to implement the functions they were expected to perform. They are heavily dependent on the grants from Central Government (First Tier) and State Governments (Second Tier). The taxation powers given to PRIs are wide, but doubts have been raised whether they can fully utilise these powers in an effective manner. Panchayats at all the three levels are found to be reluctant to impose taxes due to various reasons. This paper makes an attempt to review the lacunae in the existing tax administration system of collection of revenues by PRIs in West Bengal and suggests measures to rectify the loopholes. Further, it focuses on some problems in tax administration and also examines whether the PRIs at Gram Panchayat (GP) level are able to fully exploit the sources assigned to them or do they face any constraints towards fuller utilisation of present sources of revenue. This analysis mostly deals with the lowest tier of the PRIs, viz., the Gram Panchayats.