Finance Commission said – take care of states on tax sharing, The states’ share in tax is based on many aspects.
The current Finance Commission preferred continuity and future projections when deciding on states’ share in tax. Chairman NK Singh said on Saturday that the states’ share in the total pool has been retained at 41 percent.
Singh said in a webinar organized by the Center for Policy Research (CPR) that each of the earlier Finance Commission had increased states’ share in tax to some extent.
But the 15th Finance Commission considered all the options keeping in view the shortfall in revenue of both the Center and the states due to Covid-19.
In the webinar, Rajya Sabha member Sushil Kumar Modi said that the share of revenue worth sharing in the total tax revenue is continuously decreasing, as the share of cess and surcharge in the gross tax revenue is continuously increasing.
It is to be noted that in its recommendation tabled in Parliament this year, the 15th Finance Commission has said that states will be given 41 percent of the tax payable from the Center during the period 2021-22 to 2025-26.
Earlier, the 14th Finance Commission had also recommended holding the state’s shareholding at the same level.
According to the 15th Finance Commission, the gross tax revenue (GTR) for the period of five years under review is estimated to be Rs 135.2 lakh crore.
Out of these, the amount of tax to be shared between the Center and the state would be around Rs 103 lakh crore. In this also, the estimated share of the states for the five years under review is Rs 42.2 lakh crore.
Singh said that till now, each Finance Commission has continuously increased the share of states in the tax to be shared between the Center and the state.
We also had the option of continuing this trend. But we kept in mind the fact that the revenue of both the Center and the state is steadily declining under the changed circumstances.
According to him, the Finance Commission also had the option to reduce the share of states, but it was retained at the previous level.
India remains a solid strategy to achieve double-digit growth for a long time.
The way the Indian economy has shown the ability to recover from the devastation of the Corona epidemic has given policymakers confidence that double-digit growth rates (over 10 percent) can be achieved over the long term.
This strategy will not only fulfill the Modi government’s intention to make India a five trillion dollar economy but will also contribute to the liberation of India from poverty in two decades.