14th Finance Commission: Share of States in the Union Tax Revenue

The 14th Finance Commission of India is constituted under the chairmanship of the former RBI governor Mr. Y.V. Reddy for the period of April 1, 2015, to March 31, 2020. Now the 15th Finance Commission has been set up under the chairmanship of N.K. Singh. He has submitted his annual report for 2020-21.
Created On: Apr 27, 2020 15:58 IST
Modified On: Apr 27, 2020 15:58 IST
14th Finance Commission
14th Finance Commission

As we know that most of the taxes in India are imposed and collected by the Union government and states government are left with very limited sources of the income to run their administration. That is the reason that article 280 of the Indian Constitution requires the composition of the Finance Commission in every five years so that the states can get a reasonable part in the tax revenue of the union government.  

The 14th Finance Commission of India is constituted in the chairmanship of the former RBI governor Mr. Y.V. Reddy for the period of April 1, 2015, to March 31, 2020.

The 14th Finance Commission has recommended a record 10% increase in the states' share in the Union taxes to 42% as compared to the 13th Finance Commission. The total devolution to states during the five years (2015-20) period will be Rs 39.48 lakh crore.

Criteria and weights for the horizontal distribution of the tax is as follows;

                                     Criteria

                                          Weight (%)

 1. Income Distance

 50

 2. Population (1971)

 17.5

 3. Area

 15

 4. Demographic Change (2011)

 10

 5. Forest Cover

 7.5

 The share of the States in the Union Tax Revenue is as follows;

                State

 Share of States in the Union Tax Revenue (%)

 1.  Andhra Pradesh

 4.035

 2.  Arunachal Pradesh

 1.37

 3.  Assam

 3.111

 4.  Bihar

 9.665

 5.  Chhattisgarh

 3.08

 6.  Goa

 0.378

 7.  Gujarat

 3.084

 8.  Haryana

 1.084

 9.  Himachal Pradesh

 0.713

 10. Jammu & Kashmir

 1.854

 11. Jharkhand

 3.139

 12. Karnataka

 4.713

 13. Kerala

 2.5

 14. Madhya Pradesh

 7.548

 15. Maharashtra

 5.521

 16. Manipur

 0.617

 17. Meghalaya

 0.642

 18. Mizoram

 0.46

 19. Nagaland

 0.498

 20. Odisha

 4.642

 21. Punjab

 1.577

 22. Rajasthan

 5.495

 23. Sikkim

 0.367

 24. Tamil Nadu

 4.023

 25. Telangana

 2.437

 26. Tripura

 0.642

 27. Uttar Pradesh

 17.959

 28. Uttarakhand

 1.052

 29. West Bengal

 7.324

 All states

 100

In the recommendations of the 14th Finance Commission, the share of the 9 states has decreased as compared to the recommendations of the 13th Finance Commission. These states are Andhra Pradesh (including Telangana), Assam, Bihar, Himachal Pradesh, Odisha, Rajasthan, Tamil Nadu, Uttar Pradesh and Uttarakhand.

The above table is depicting that Uttar Pradesh (17.959%) has the biggest share in the taxes of union government followed by the Bihar (9.665%) and Madhya Pradesh (7.548%).

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