(1) Every taluka panchayat shall have prepared annually on or before the 15th

December of the current year or such date not later than 31 st December of the current year as may be approved by the District Panchayat, in such form and manner as may be prescribed in this behalf a budget estimate of its income and expenditure for the next year and forward it to the district panchayat on or before—

1. (a) the 31st December of the current year where the budget estimate is prepared on or before the 15th December of the current year, or.
2. (b) the 15th January of the current year the budget estimate is prepared after the 15th December of the current year but on or before the said approved date: Provided that the budget estimate shall be so prepared that at the end of the year the panchayat shall have at its credit a balance of not less than such minimum amount as may be precribed in that behalf.

1. (2) The district panchayat shall scrutinise the budget estimate and return it to the panchayat within two months of its receipt with such observations and recommendations as it may make in respect of the budget estimate.
2. (3) The taluka panchayat shall thereupon approve the budget estimate on or before the 31st March of the current year with such modifications as it may think fit having regard to the observations and recommendations made by the panchayat under sub-section (2).
3. (4) Where any taluka panchayat has failed to comply with the provisions of sub-section (3) it shall be lawful for the State Government to form an opinion that the panchayat is incompetent to perform the duties imposed on it or functions entrusted to it under the provisions of this Act.

Explanation : A taluka panchayat shall not be deemed to have failed to comply with the

provisions of sub-section (3) if such failure has resulted on account of non-compliance by the district panchayat of provisions of sub-section (2).