The Punjab-Municipal-Fund-Act-2006

The Punjab Municipal Fund Act, 2006
The Punjab Municipal Fund Act, 2006
Punjab Act No. 27 of 2006
CONTENTS
1. Short title and commencement 
2. Definitions 
3. Constitution of the Fund 
4. Object and administration of the Fund 
4-A. Compensation to Cantonment Boards.
5. Collection and deposit of tax 
6. Distribution of amount of tax 
7. Maintenance of accounts
8. Audit 
9. Submission of annual report
10. Grant
11. Power to make rules
12. Protection actions taken in god faith 
13. Power to remove difficulties 
14. Repeal and saving
Legislative History
1. Amended by Punjab Act 17 of 2008.
Department of Legal and Legislative Affairs, Punjab
 Notification
Dated the 16th October, 2006
No. 38-Leg./2006 - The following Act of the Legislature of the State of Punjab
received the assent of the Governor of Punjab on the 10th October, 2006, and is
hereby published for general information :-
An Act to assign to the Municipalities amount of tax, levied and collected un-
der the Punjab Value Added Tax Act, 2005, and to provide for the constitution
of the Punjab Municipal Fund with a view to compensate the Municipalities
for the loss of revenue, suffered due to the abolition of octroi in the State of
Punjab and for the matters connected therewith or incidental thereto.
Be it enacted by the Legislature of the State of Punjab in the Fifty- seventh Year
of the Republic of India as follows :-
Section 1
1. Short title and commencement - (1) This act may be called the Punjab Mu-
nicipal Fund Act, 2006.
(2) It shall be deemed to have come into force on and with effect from the first
day of September, 2006.
Section 2
2. Definitions - In this Act, unless the context otherwise requires -
(a) "Director" means the Director, Local Government, Punjab;
(b) "Fund" means the Punjab Municipal Fund, constituted under section 3 of
this Act;
(c) "Municipality" means an institution of self-government constituted under
Article 243Q of the constitution of India;
 (d) "prescribed" means prescribed by rules made under this Act;
(e) "State Government" means the Government of the State of Punjab in the
Department of Local Government; and
(f) "tax" means a tax levied and collected under the Punjab Value Added Tax
Act, 2005 (Punjab Act No. 8 of 2005).
Section 3
3. Constitution of the Fund - (1) There shall be constituted a Fund, to be called
the Punjab Municipal Fund, which shall vest in the State Government.
(2) Ten per cent of the amount of tax collected, shall be credited direct of the
Fund:
Provided that the amount, so credited to the Fund, shall not be less than Rs. 550
crores (Rupees five hundred fifty crores only) per annum or proportion
thereof :
Provided further that in the event of the amount credited to the Fund under sub-
section (2) falling short of Rs. 550 crores (Rupees five hundred fifty crores
only) or a proportion thereof, the State Government shall make it up by
giving the amount so failing short as grant-in-aid.
Section 4
4. Object and administration of the Fund - (1) The Fund shall be utilised to
compensate the Municipalities for the loss of revenue, suffered by them due to the
abolition of octroi, levied and collected under the Punjab Municipal Act, 1911 and
the Punjab Municipal Corporation Act, 1976.
(2) The Fund shall be administered by the Director under the superintendence
and control of the State Government.
Section 4A
1[4-A. Compensation to Cantonment Boards.  - Notwithstanding any thing
contained in Section 4, the Fund shall also be utilized to compensate the Canton-
ment Board, Jalandhar and Cantonment Board, Ferozepur for the loss of revenue,
suffered by them due to the abolition of octroi, levied and collected by them, if the
cantonment authorities enter into an agreement with the State Government, not to
levy and collect octroi in these cantonments.
Explanation. - For the purpose of this Section, the Cantonment Board shall
have the same meaning as has been assigned to it in the Cantonments Act,
2006 (Central Act 41 of 2006).]
Section 5
5. Collection and deposit of tax - (1) Ten per cent of the amount of tax referred
to in sub-section (2), of section 3, shall be collected by the Department of Excise
2     The Punjab Municipal Fund Act, 2006, Section 3
1. Added by Punjab Act No 17 of 2008.
and Taxation in the manner, prescribed by that department for collection of the
tax.
(2) The proceeds of the tax collected under sub-section (1), shall be caused to be
deposited by the Department of Excise and Taxation direct to the Fund in such
manner and within such period, as may be prescribed.
Section 5
6. Distribution of amount of tax - The amount of tax credited to the Fund, shall
be distributed amongst the Municipalities in the proportion the their ratios of an-
nual collection of octroi from the goods, on which octroi was being levied before
coming into force of the Punjab Municipal Fund Act, 2006, to the total collection
of octroi made from such goods during the financial year of 2005-06 in the State
of Punjab.
Section 6
7. Maintenance of accounts -   The Director shall maintain accounts of the
amount credited to the Fund and the expenditure made out of the Fund, and shall
quarterly reconcile such amount and expenditure with the District Treasury Offi-
cer, Punjab, Chandigarh and submit quarterly report in this regard to the State
Government.
Section 8
8. Audit - The amount of Fund shall be audited by the Comptroller and Audi-
tor-General of India in accordance with the provisions of the Comptroller and
Auditor-General’s (Duties, Powers and conditions of Service) Act, 1971 (Central
Act 56 of 1971).
Section 9
9. Submission of annual report - The annual report in respect of the receipts
into the Fund and distribution made out of the Fund to the 1[Municipalities and the
Cantonment Board, Jalandhar and the Ca ntonment Board, Ferozepur], shall be
prepared by the State Government and be submitted to the State Legislature.
Section 10
10. Grant - The Government in the Department of Finance, immediately after
the commencement of the Punjab Municipal Fund Act, 2006, shall give an
amount of rupees one hundred crores as a one time grant to the Department of Lo-
cal Government, which shall be deposited in the Fund to meet and expenditure, to
be incurred by the Municipalities during the interregnum period i.e. the period
commencing from the date of abolition of octroi to the date of actual receipts in
the Fund.
Section 11
11. Power to make rules - (1) The State Government may, by notification in the
Official Gazette, make rules for carrying out the purposes of this Act.
(2) In particular and without prejudice to the generality of the foregoing power,
such rules may provide for all or any of the following matters, namely :-
(i) the manner for transferring and depositing the proceeds of tax under sub-
section (2) of section 5 of the Act; and
The Punjab Municipal Fund Act, 2006, Section 5 3 
1. Substituted by Punjab Act No 17 of 2008.
(ii) the period within which, tax is to be deposited under sub- section (2) of sec-
tion 5 of the Act.
(3) Every rule made under this Act, shall be laid, as soon as may be, after it is
made, before the House of the State Legislature while it is in session for a total pe-
riod of ten days, which may be comprised in one session or in two or more
successive sessions and if, before the expiry of the session in which it is so laid or
the successive sessions as aforesaid, the House agrees in making any modification
in the rule of the House agrees that the rule should not be made, the rule shall
thereafter have effect only in such modified form or be of no effect, as the case
may be, so however that any such modi fication or annulment shall be without
prejudice to the validity of anything previously done or omitted to be done under
that rule.
Section 12
12. Protection actions taken in god faith - No suit, prosecution or other legal
proceedings shall lie against the State government or any officer or employee of
the State Government or any other pers on or authority, authorised by the State
Government for anything, which is done or intended to be done in good faith un-
der this Act or the rules made thereunder.
Section 13
13. Power to remove difficulties - (1) If any difficulty arises in giving effect to
any of the provisions of this Act, the State Government may, by an order publish-
ed in the Official Gazette, make such  provision, not inconsistent with the
provisions of this Act, as may appear to it to be necessary for removing the dif-
ficulty.
(2) Every order made under this section, shall be laid, as soon as my be, after it
is made before the Punjab State Legislature.
Section 14
14. Repeal and saving -  (1) The Punjab Municipal Fund Ordinance, 2006 (Pun-
jab Ordinance No. 6 of 2006), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the
Ordinance referred to in sub-section (1), shall be deemed to have been done or
taken under the corresponding the provisions of this Act.
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4     The Punjab Municipal Fund Act, 2006, Section 12

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