The Ministry of Finance of the province has withheld the conditional, special and supplementary grants of 25 municipalities of Madhesh Province that have not deposited the revenue collected as per the recommendations and limits prescribed by law into the provincial government treasury. Due to which the salary distribution and development work of the employees in those municipalities will be affected. 

There are 136 municipalities in 8 districts of Madhesh. Out of these, 25 municipalities have not deposited the revenue sharing amount due to the provincial government into the provincial consolidated fund for a long time. According to the data of the Ministry of Finance, the provincial government is yet to receive a total of Rs 622.959 million 232 thousand 232 from those municipalities. 

The conditional, special and supplementary grants to be provided in the current fiscal year to the municipalities that have not deposited the revenue amount despite repeated requests have been withheld, said Yubaraj Bhattarai, Finance Minister of Madhesh Province. "Even before, it was found that the municipalities ignored the repeated requests to deposit revenue," he said. "Such actions by the local level raise questions about the federal governance system. Local governments are autonomous but not above the law." 

Some time ago, the 63rd annual report released by the Office of the Auditor General revealed that the provincial government's reserves had shrunk due to the non-deposit of the amount and classified it as undeclared. Legal and moral pressure on the provincial government increased immediately after the report was made public. The Ministry of Finance stated that the provincial development budget and plan formulation were directly affected after its own subordinate bodies withheld the amount in violation of the law. 

For two years, the ministry had been writing letters to the concerned municipalities, urging them and even verbally warning them. The ministry had also raised this issue in the Provincial Coordination Council meeting through repeated letters. But since the municipalities continued to refuse and the Accountant General himself seized the legal basis by showing undeclared funds, Minister Bhattarai said that there was no option but to stop the grant.

Nijgadh Municipality in Bara has the highest revenue arrears, according to the provincial finance ministry. The municipality has arrears of Rs 239.27 million to pay to the provincial government for stone, gravel, sand royalty and advertisement tax since the fiscal year 2074/75. Surya Prasad Gautam, the municipality's chief administrative officer, claimed that Rs 26.4 million has been paid. But the records of this have not yet reached the finance ministry. 

Gautam, the chief administrative officer, says that a large amount is yet to be paid as the provincial government has not made any request for a long time. 'Now, we cannot pay such a large amount at once. We have said that we will pay in installments,' he said, 'The ministry has made a request only this year. We will regularly pay the amount due to the provincial government from the revenue collected.' The municipality has stated that canals, drains and culverts have been constructed from the revenue. The municipality has arrears of Rs 28.08 million to pay to the provincial government for advertisement tax alone.

Ganeshman Charnath Municipality in Dhanusha has arrears of Rs 38.23 million. Tekraj Bhattarai, the municipality's chief administrative officer, said that the amount due to the provincial government has not been paid. "I have just been transferred," he said, "I will take the initiative after understanding how much revenue is due." 

Dhanushadham Municipality has not paid Rs. 1.68 million and Mithila Municipality Rs. 1.35 million to the provincial government since the fiscal year 2079/80. Sarlahi's Basbariya Rural Municipality has not paid Rs. 543 thousand, Ishworpur Municipality Rs. 9256 thousand, Haripur Municipality Rs. 1722 thousand, Lalbandi Municipality Rs. 7442 thousand and Bagmati Municipality Rs. 6777 thousand as revenue sharing amount. Siraha's Lahan Municipality has yet to pay Rs. 150 million 60 thousand, Karjanha Municipality Rs. 7736 thousand, Mirchaiya Municipality Rs. 1681 thousand, Dhangadhimai Municipality Rs. 2718 thousand, and Golbazar Municipality Rs. 8012 thousand. 

Rautahat's Gaur Municipality has not remitted Rs 6.2 million, Chandrapur Municipality Rs 3.83 million, 960, Gadhimai Municipality Rs 8.01 million, Jitpur-Simara Sub-metropolitan Municipality Rs 1.35 million, 51 million, and Kolhabi Municipality Rs 58.3 million, 88 million, to the provincial government. Mahottari's Bhangaha Municipality Rs 1.78 million, Bardibas Municipality Rs 2.85 million, 35 million, and Gaushala Municipality Rs 6.46 million, Parsa's Jirabhavani Rural Municipality Rs 1.39 million, Parsagadhi Municipality Rs 8.17 million, and Birgunj Metropolitan Municipality Rs 2.35 million, 34 million, are yet to remit revenue to the provincial government.

Chandani Dalami, Revenue Officer at the Madhesh Province Finance Ministry, said that it appears that municipalities have deliberately not sent the revenue sharing amount to the province even after collecting it. 'Since the fiscal year 2074/75, some municipalities have not sent their share of revenue to the provincial government even after collecting revenue. Even though there is a provision in the law, the municipalities cheated,' she said.

If the grant is stopped, the salaries of employees and development work will be affected, said Chandrapur Municipality Branch Officer Mishri Lal Sah. 'We have already paid all the remaining arrears,' he said, 'only this year is left. All the previous amounts have been paid.' 

According to the Constitution of Nepal and the Local Government Operation Act, 2074, there is a legal provision that a certain percentage of the non-tax or tax revenue (such as stone, gravel, sand excavation, advertisement tax, entertainment tax, etc.) collected by the local level must be deposited in the provincial consolidated fund. However, the ministry says that the municipalities are spending the money they collect in their own funds arbitrarily. The provincial government sends four types of grants to strengthen the local level. Since the fiscal equalization grant is a constitutional right, the provincial government has stated that it has done its homework to stop the other three grants even if it is not used.