Pune: Pune Municipal Corporation (PMC) has been grappling with a revenue shortfall issue since the inclusion of 34 villages within its limits in two phases, beginning in 2017. Despite rapid development in these newly incorporated areas, PMC is still not receiving its due share of Goods and Services Tax (GST) and stamp duty on land transactions. The fiscal implications have become a point of concern as PMC is in dire need of funds to expedite essential infrastructure projects in these villages.
The expansion of PMC to encompass 34 villages, including 11 in 2017 and 23 in 2020, has significantly increased the municipal area, now spanning over 400 square kilometres. This enlargement was further accelerated by new development control regulations and the implementation of the metro project, spurring redevelopment and planned construction in the older parts of the city and the newly included villages.
As a result, land and property transactions have surged, considerably increasing the state’s revenue through stamp duty collections. Simultaneously, in 2017, the introduction of GST by the central government, replacing all local taxes, promised to provide an additional share of revenue to PMC. Presently, however, only transactions within the pre-expansion municipal boundaries are contributing to stamp duty and GST revenues, leaving the newly incorporated villages untapped.
PMC officials estimate that if these villages’ transactions were accounted for, PMC would receive an additional annual income of at least Rs. 200 crore. At present, PMC receives approximately Rs. 193 crore per month from GST and local stamp duty collections within the old city limits. Therefore, the shortfall in revenue from the newly included areas has become a matter of concern for PMC now.
In light of the situation, PMC has been actively following up with the state government to address the revenue-sharing issue. Substantial funds are essential for developing critical infrastructure, including drainage lines, rain sewers, sewage treatment plants, and roads in these newly incorporated villages.
However, given the current income, it would take a considerable amount of time to complete these projects in phases. In response to this, PMC has initiated projects independently, relying on public-private partnerships and exploring options for securing loans from banks and international financial institutions to fund these substantial projects.
Municipal officials are emphasising that revenue from stamp duty and GST would significantly support the development of these villages, which have witnessed increased construction and economic activity. Ulka Kalskar, Joint Commissioner of Pune Municipal Corporation, has acknowledged that PMC has yet to commence collecting shares of stamp duty and GST revenue from the 34 villages included in its jurisdiction and assured that PMC continues to engage with the government to rectify this issue.
