There is palpable anxiety among the southern states over their share of tax revenue allocated by the centre going forward. Recall, states in India, even before the GST, had no real powers of direct taxation to levy local income taxes on their residents. Now, with the GST, states have also lost their powers of levying local indirect taxes, essentially leaving them entirely dependent for all tax revenue on a transfer formula from the centre. What is more, provinces levy income tax in addition to federal income tax, giving them considerable revenue capabilities. States levy widely varying sales and income taxes, from high to zero, and, like in Canada, municipalities levy property taxes.

Source: Mint April 08, 2018 16:52 UTC