Govt to increase state’s Tax share to 42 percent


New Delhi: The Central Government on Tuesday accepted the recommendations of the 14th Finance Commission to increase the share of the states in central taxes to 42%.

The finance commission had recommended an increase in the share of the states from 32% to 42%. The decision is expected to give the states more power in determining how they spend their money.

The 14th Finance Commission headed by Former Reserve bank Governor YV Reddy submitted its report to the President in December recommending a new process of distribution of tax revenues and grants between the centre and the states.

Besides recommending on the sharing of the tax revenues, the commission has also provided principles for giving grant-in-aid to states and other local bodies for a five year period.

The 13th Finance commission was headed by former Finance Secretary Vijay Kelkar and had suggested a 32 percent share for the states.