Tax devolution by Centre to states slashed by a fifth in October 2020

by Nidhi Bhati

In October 2020, Centre’s tax devolution to states stood at Rs.372.3 billion, downsized by one fifth of the amount envisaged in Budget, as per a report in Financial Express. The overall decline in tax revenue growth has impacted the devolution. Increased use of the cess/surcharge route by the Centre since the 14th Finance Commission award has also resulted in a decline in states’ share in Centre’s gross tax receipts (including cess/surcharge proceeds) in recent years. As a percentage of Centre’s gross tax receipts, tax transfers to states had jumped from 28 per cent in 2012-13 to 35 per cent in 2015-16 but has since fallen to 32.4 per cent in 2019-20.

References
1. https://www.financialexpress.com/economy/centre-cuts-tax-transfers-to-states-by-a-fifth-in-october/2139415/
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