States share of central taxes

[Ryzen_renoir]

Traditionally backward BIMARU States — Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh — are likely to see a 20-22 per cent increase in revenue from the Centre’s taxes and duties collection in FY22. But, when the Budget Estimate (BE) of FY22 is compared with the actual devolution in FY20, there is a decline in the budgeted numbers for many States.

According to the latest Union Budget, the net proceeds from Central taxes and duties to these four States for FY22 is budgeted at ₹2,78,691 crore. The allocation marks a 21 per cent increase from the Revised Estimate (RE) for FY21, at ₹2,30,208 crore.
 

Among these four States, the share of Central taxes to Madhya Pradesh will increase 20 per cent to ₹52,246.68 crore in FY22 from ₹43,372.09 crore in FY21, while proceeds to Uttar Pradesh and Bihar will go up 21 per cent each. Rajasthan will see the highest growth in Central tax revenue receipts among the pack, at 22 per cent. (Graph 1).

 
Lower base
However, the budgeted increase in the share of Central taxes to States for FY22 is from a lower base of pandemic-hit FY21, which witnessed a sharp fall in tax collections on account of the economic slowdown.

In fact, the BE of Central tax revenues to many States is less than the actual receipt of these States in FY20. For instance, Uttar Pradesh’s share for FY22 is budgeted at 1,19,395 crore. While it is a 21 per cent increase from the FY21 RE, it’s 3 per cent lower than the FY20 actuals of ₹1,22,729 crore. Similarly, the share of revenue to Tamil Nadu, Odisha, Andhra Pradesh and Karnataka have all gone down vis-à-vis the actual receipt for FY20.

For FY22, Uttar Pradesh, Bihar and Madhya Pradesh top the list of States that will receive the highest share of revenue from the Centre's divisible pool of taxes (Table 2).

Devolution formula
The devolution of taxes and duties and grants to States is based on the 15th Finance Commission recommendation that the Centre share 41 per cent of the net proceeds of taxes with the States, against the present 42 per cent. It also suggested that the Centre retain financial resources equivalent to 1 per cent of the net proceeds of taxes with itself, for financing the requirements of the newly formed Union Territories of Jammu & Kashmir and Ladakh.

The Finance Commission follows a horizontal devolution formula to arrive at tax devolution.

The formula assigns weightage for various criteria such as the States’ population (15 per cent), area (15 per cent) and income distance (45 per cent) to arrive at the devolution.

Among the components of Central taxes and duties to States, Central GST accounts for the largest share of devolution in volume followed by income-tax collection and corporation taxes (Table 3).

According to the Finance Commission’s assessment, gross tax revenues for the period FY22 to FY26 are expected to be ₹135.2-lakh crore, of which the divisible pool (after deducting cess and surcharges, and cost of collection) is estimated at ₹103-lakh crore.

[Dosakai]

Telangana is a small state with a huge metro like Hyd. lite teesko.

[Ryzen_renoir]

Emi choosi vote vestharu Telangana prajalu for BJP ?  

Not a single project granted , not allocating decent share of taxes , not allocating funds for central schemes . 

Andhra  melu kadha entho kontha funds lagesthunaru silent ga 

[Ryzen_renoir]

1 minute ago, Dosakai said:

Telangana is a small state with a huge metro like Hyd. lite teesko.

Andhra population kooda almost similar kadha , just 25% more .  

[Dosakai]

1 minute ago, Ryzen_renoir said:

Emi choosi vote vestharu Telangana prajalu for BJP ?  

Not a single project granted , not allocating decent share of taxes , not allocating funds for central schemes . 

Andhra  melu kadha entho kontha funds lagesthunaru silent ga 

hmmm...   I think TG is in way better shape than most other states. tax devolution takes that into account too.. and the population too.

[Dosakai]

Just now, Ryzen_renoir said:

Andhra population kooda almost similar kadha , just 25% more .  

andhra comparatively less developed. TG has Hyd which is one of the top metros in India.

[Dosakai]

1 minute ago, Ryzen_renoir said:

Andhra population kooda almost similar kadha , just 25% more .  

Hyd alone pushes TG's percapita income in the top 3 in India. Andhra is nowhere close. even if you just consider only rich godavari districts for comparison, they would lag Telangana.

How do you expect a small rich state to get a large tax share from the union?

[Telugodura456]

purpose of india = transfer money form south to north and impose language from north to south.

[Telugodura456]

Just now, Dosakai said:

Hyd alone pushes TG's percapita income in the top 3 in India. Andhra is nowhere close. even if you just consider only rich godavari districts for comparison, they would lag Telangana.

How do you expect a small rich state to get a large tax share from the union?

rich ante - some people maybe rich which will skew percapita income. But keeping the local govt poor while city has high per capita is not good in long term.

[MiryalgudaMaruthiRao]

5 minutes ago, Ryzen_renoir said:

Emi choosi vote vestharu Telangana prajalu for BJP ?  

Not a single project granted , not allocating decent share of taxes , not allocating funds for central schemes . 

Andhra  melu kadha entho kontha funds lagesthunaru silent ga 

AP ki iyyakapotey Jagan bend teestadu Modi ki

[manadonga]

1 minute ago, Ryzen_renoir said:

Andhra population kooda almost similar kadha , just 25% more .  

factors anni veyyi population okkate kadu 

forest land , area, income distance 

population control 

Karnataka loosing more than Telangana 

still karnataka vallu veyyatam leda bjp ki 

Delhi, haryana , gujarat  is collecting higher taxes than tg 

 

 

[Dosakai]

2 minutes ago, Telugodura456 said:

rich ante - some people maybe rich which will skew percapita income. But keeping the local govt poor while city has high per capita is not good in long term.

for all practical purposes TG is way richer than Andhra now. not even in the same ball park. 

TG cannot expect share equal to AP for this reaason.

[Ryzen_renoir]

Just now, MiryalgudaMaruthiRao said:

AP ki iyyakapotey Jagan bend teestadu Modi ki

Jagananna ey kadhu , chabdrana kooda baga thechukunadu . Central schemes ni full ga vadey state AP  MNREGA , Ayushman bharat , life insurance , amrut funds , etc

 

[chandrabhai7]

Sharmila for TG

centre medalu vanchutam 

[manadonga]

https://economictimes.indiatimes.com/news/economy/policy/dividing-the-pie-the-debate-between-budget-2020-and-15th-finance-commission-over-sharing-finances/articleshow/74031547.cms?from=mdr