With a substantial section of the population moving to cities in quest of better opportunities and higher living standards, urbanisation is drastically changing the landscape of India. Local governments in India face both opportunities and challenges as a result of this rapid urbanisation. Municipalities are crucial for providing basic services, building infrastructure, and promoting social and economic advancement at the local level. The ability of local governments to raise the necessary funds to meet the changing needs of the people and society in general becomes increasingly important as urbanisation accelerates.

This paper aims to address the issues and challenges of municipal finance while emphasising the importance of fiscal autonomy for the local government. It will explore the need for innovative revenue generation strategies to meet the rising demands of urbanisation and provide basic services and infrastructure.

We have refrained from examining property tax, professional tax, etc., due to the extensive and well-established literature on those subjects. In reiterating the imperative to enhance existing tax collection methods, this paper focuses on exploring new avenues for tax collection.