States Demand Greater Tax Share: Finance Commission Deliberates
The majority of Indian states are urging the Finance Commission to increase their tax revenue share to 50% from the current 41%. Chairman Arvind Panagariya highlighted this demand amid ongoing consultations. However, he cautioned against expecting a large change in distribution due to practical constraints.
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The chairman of the 16th Finance Commission, Arvind Panagariya, revealed that a significant majority of the 28 Indian states have called for an increase in their share of tax revenue distribution from the central government, targeting a 50% share.
Currently, the states receive 41% of tax revenue, while the remainder is retained by the Centre. This topic was a central theme during a recent press conference held in Uttar Pradesh, which marked the conclusion of the panel's consultation visits to the states.
Despite the widespread state requests, Panagariya remained non-committal about whether the final recommendations, due by October 2025, will include this proposed increase, noting that such a change might be too significant and disruptive.
(With inputs from agencies.)
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