Correct Option
The correct option isRevenue comes from taxes and service charges.
Explanation
Municipal Corporations are established for the administration of large urban areas. Under the constitutional framework (74th Amendment Act) and respective State Municipal Acts, these bodies are empowered to generate revenue to fund their functions and services. Their financial autonomy is supported by specific taxation powers and non-tax revenue sources.
Analysis of Options:
- Taxes are levied exclusively on property owners. is Incorrect: Taxes are not levied exclusively on property owners. While property tax is a significant component of municipal revenue, corporations also levy taxes on advertisements, entertainment, professions, and vehicles, among others.
- Revenue comes from taxes and service charges. is Correct: The revenue structure of a Municipal Corporation is a mix of tax revenue (e.g., property tax, water tax) and non-tax revenue (e.g., user charges for water supply and sanitation, fees for building plans, birth/death certificates, and fines). This combination ensures a diversified income stream.
- Commercial establishments are exempt from municipal taxation. is Incorrect: Commercial establishments are a major source of revenue. They are subject to commercial property taxes, trade license fees, and other specific levies. They are not exempt; rather, they often pay higher rates than residential properties.
- Municipal services are funded entirely by the Central Government. is Incorrect: Municipal services are not funded entirely by the Central Government. Funding comes from internal sources (taxes and fees), assigned revenues, and grants-in-aid from both the State Government (based on State Finance Commission recommendations) and the Central Government.
Key Takeaway:
The revenue of a Municipal Corporation is derived from tax revenue (property, professional tax), non-tax revenue (user charges, fees), and fiscal transfers (grants and loans) from State and Central governments.