Five opposition-ruled states seek to raise the divisible tax pool from 41% to 50% and cap central cesses and surcharges.
Concerns about reduced autonomy in tax collection under GST, particularly affecting economically strong states.
Recent Union Budget allocations are insufficient for major infrastructure projects in states like Karnataka and Kerala.
Recent disasters highlight the need for more financial resources for contingency expenses, which are not adequately addressed.
States like Gujarat, Karnataka, Maharashtra, and Tamil Nadu receive lower devolutions despite their significant tax contributions, limiting development funding.
High-performing states require customized funding to meet their specific developmental and climate challenges.
There is an urgent need to amend the tax devolution framework to enhance state autonomy and support diverse regional needs.
The Sixteenth Finance Commission’s recommendations on tax devolution are expected by October 2025.
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