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Sharing of Union Tax Revenues with States

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Governance

Chapter 8 of Finance Commission-XIII ( FC-XIII) made recomendations ( Dec'2009 ) on basis for tax sharing 32% of collection by Center with inter -se  distribution of the states share amongst the states on the following criteria :

http://fincomindia.nic.in/writereaddata%5Chtml_en_files%5Coldcommission_html/fincom13/tfc/13fcrExpMemo.pdf

Criteria as below :

1. Population    :  25%  weight with 1971 Census

2.  Area              :  10%

3. Fiscal capacity Distance : 47.5%

4. Fiscial Discipline              : 17.5% 

http://fincomindia.nic.in/writereaddata%5Chtml_en_files%5Coldcommission_html/fincom13/tfc/Chapter8.pdf

With above logic,  UP got 19.677% share followed by Bihar : 10.917%, West Bengal : 7.264%, Madhya Pradesh : 7.120%. 

Bigger revenue / tax collection states having lower tax share by Center : Maharastra : 5.199%,  Karnataka : 4.328%, Punjab : 1.389%, Andhra Pradesh : 6.937%, Gujarat : 3.041%,  Tamil Nadu : 4.969%

Annexure   :   7.6  and 7.7   shows which state generate more revenues  as per below Finance report:

http://fincomindia.nic.in/writereaddata%5Chtml_en_files%5Coldcommission_html/fincom13/tfc/13fcrengVol2.pdf

Now with Yesterday Finance Budget,  lets look at how state wise distribution of net Proceeds of Union Taxes and Duties 2013-14

http://indiabudget.nic.in/ub2014-15/rec/annex10a.pdf

Here Bihar getting Rs 34493 Crore Central share,  UP : 63974 Crore,   WB : 23617,  MP : 23148 Crore

MH : 16903,  TN : 16155,  AP : 22554,  Karnataka : 14071

Details as per below report :

http://indiabudget.nic.in/ub2014-15/rec/annex10a.pdf

 

Some one can throw the light on these how states collecting more atxes are punished and  other states getting lion share.

 

 

 

Comments

Sanjeev's picture

Now Karnataka / Bangalore has to raise loans for METRO

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With small token amount allocated for METRO project,  BMRCL will be forced to raise bank loans.

Same time,  Indian Railways does not have funds,  so GOK is forced to share  Railway project cost by 50%.

Even the Suburban Rail / Commuter Rail Bangalore is waiting for funds / approval,  both GOK and Indian Railways till finding out the viaility of  the project.

Double blow for State Karnataka : Collect more Central Taxes thru Excise and Customs,  get less Center share and again come forward the cos sharing projects like METRO, Railways with commitments of 20,000 Crore.

If such lopsided tax sharing  between State and Center,  how will India grow even after 60 years of Freedom.

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