He explained that while 50% of GST revenue goes to states, of the remaining 50% that goes to Centre, 41% is devolved back to states as per the Finance Commission formula. This, he said, was lower than what the states were getting prior to the GST regime when VAT was levied. Finance Commissions make recommendations on sharing of the Centre’s tax revenue with states and also on tax reforms, efficiency in tax administration and in expenditure reforms. Uttar Pradesh and Bihar had the highest share in the 15th Finance Commission’s award. Countering the criticism that state finance commissions do not function appropriately, Deo said the Centre should not interfere in state matters.

Source: Mint December 02, 2023 15:09 UTC