14th Finance Commission: Share of States in the Union Tax Revenue
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 |
| 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 |
| 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%).
Devaluation of Indian Rupee: Reasons & History Since 1947
15th Finance Commission: Meaning, Facts, Members and Terms of Reference
