Majority of States want tax revenue share with Centre hiked to 50%: Arvind Panagariya

Arvind Panagariya, Chairman, 16th Finance Commission addressing a press conference, in Lucknow on Wednesday
| Photo Credit:
SANDEEP SAXENA

Majority of 28 States have asked the Finance Commission to increase tax revenue distribution between the Centre and states to 50 per cent, the panel’s Chairman said here on Wednesday.

At present, States get 41 per cent of the tax revenue while the rest goes to the Centre, 16th Finance Commission Chairman Arvind Panagariya said.

The panel was in the Uttar Pradesh capital as part of its consultation visit to all States in the country.

At a press conference with other commission members, Panagariya told reporters, “The previous finance commission had set the (tax revenue) share at 41 per cent for states and 59 per cent for Centre. That’s how it is now.”

“Like most other State governments, UP has also asked for the share to be raised to 50 per cent from the present 41 per cent. Out of the 28 states, more than 22 have made this recommendation,” Panagariya said.

However, the chairman declined to reveal if the Finance Commission’s recommendations to the President would include this.

Earlier in his address, Panagariya noted that the convention in the past has been that the recommendations of the Finance Commission have been accepted in the exact form.

The 16th Finance Commission of India was constituted on December 31, 2023, under Article 280 of the Constitution. Its primary mandate is to recommend the distribution of tax revenues between the Centre and the states, for a five-year period commencing April 1, 2026.

The Commission is expected to submit its report by October 31, 2025. Its recommendations would be for 2026-27 to 2030-31.

Published on June 4, 2025