(1) The compensation payable to a local authority shall be provisionally calculated and released on monthly basis and shall be finally calculated for every financial year after the receipt of final revenue figures, as audited by the Local Fund Accounts Audit.
(2) The total compensation payable for any financial year to any local authority shall be calculated as follows:-
(a) The projected revenue for any financial year shall be calculated as per section 6 or, as the case may be, section 7.
(b) The revenue accruable to the local authority shall be calculated and which shall be the revenue accruable on account of the taxes, fees or other sources of revenue assigned after the commencement of this Act to the local authority by the State Government and the revenue accruable on account of increase in rate of tax, amount of fees or increase in rate of other means of sources of revenue assigned before the commencement of this Act to the local authority by the State Government.
Explanation.- For the purpose of this section, the revenue accruable to a local authority means the revenue which the State Government could have collected from the area within the jurisdiction of that local authority had the taxes, fees or other source of revenue not been assigned to that local authority and the State in this regard shall, specify such amount of revenue.
(c) Total compensation payable in any financial year shall be the difference between the projected revenue for that financial year and the revenue accruable for that year to a local authority as specified in clause (b).
Illustration I. Ist year Base year revenue for the year 2016-17. 100 Projected revenue for 2017-18 i.e. 8 growth. 108.00 Less amount of LBT/Octroi collected upto the date of implementation of this Act e.g. 1/4/2017 to 30/6/2017. 20.00 Less accruable revenue assigned for the period from 1/7/2017 to 31/3/2018. 20.00 Compensation payable. 68.00
II. Subsequent year Base year revenue for the year 2016-17. 100 Projected revenue for 2018-19 i.e. 8 growth. 116.64 Less accruable revenue assigned. 30.00 Compensation payable. 86.64
(3) The loss of revenue at the end of every month in any year for a local authority shall be calculated as follows :-
(a) The projected revenue that could have been earned by the local authority for a monthly period of the respective financial year would be calculated on pro-rata basis as a percentage of the total projected revenue for any financial year, calculated as per section 6 or 7.
Illustration.- If the projected revenue for any year calculated as per section 6 or 7 is Rs. 100, the projected revenue that could be earned for monthly period for the purpose of this sub-section shall be 100 X 1/12 = Rs. 08.33.
(b) The provisional compensation payable for every three months period from the appointed date to any local authority shall be paid on or before the fifth of the relevant month in advance, in any financial year and shall be the amount as calculated in clause (a). The amount of provisional compensation so payable shall be credited in the bank account so designated by the Municipal Corporation of Brihan Mumbai on or before fifth of every month, in advance and failing which, the designated bank will be authorised to credit the account of Municipal Corporation of Brihan Mumbai by an amount of compensation payable for that month against the guarantee to be issued by the State Government.
(c) In every fourth month, the provisional compensation payable to any local authority shall be the difference between projected revenue for the fourth month and revenue accruable to a local authority in the period of previous three months :
Provided that, if the amount of revenue accruable to a local authority in a period of previous three months is more than the amount of provisional compensation payable in the fourth month, then the excess amount shall be reduced from the amount of compensation payable for the fifth month and so on.
(4) In case of any difference between the final compensation amount payable to a local authority calculated as per provisions of sub-section (2) and the total provisional compensation amount released to a local authority, in the said financial year, as per sub-section (3), the same shall be adjusted against release of compensation to the local authority in the subsequent financial year, in the manner to be specified by the State Government.