The Telangana government has decided to demand 50 per cent share in tax receipts to be collected by the Centre from 2015 to 2020. The demand will be put forth before the 14 Finance Commission which will recommend distribution of tax revenues by end of October.
The delay in working out budget estimates, however, has delayed preparation of memorandum to be submitted to the Finance Commission. Based on this, the panel would hold a meeting with the State government officials to discuss distribution of tax receipts. The Andhra Pradesh government has already completed the process and the finance panel is visiting Tirupati on September 15 for a meeting with the officials.
The 13 Finance Commission had given 32 per cent share in tax receipts collected by the Centre to States even as most of the States had sought 50 per cent share. But the united A.P. government had asked for only 39 per cent as it did not wish to trouble the Centre as both the State and central governments were headed by Congress party. Sources in the Finance Department said that Telangana would seek review of the system of weightage for deciding States’ share of tax revenue. “We will insist upon reducing weightage given for per capita income from existing 47.5 per cent, as it will considerably reduce the tax share for Telangana as its per capita income could be higher than the national average”, a senior official said.
The 14 Finance Commission is yet to decide other parameters such as basis of population, 1971 Census or 2001 or 2011, for deciding the share of States, implementation of Fiscal Responsibility and Budget Management (FRBM) Act and area in terms of development according to the Planning Commission norms.
In the divisible pool of central taxes which includes income tax, corporate tax and central excise tax, the united A.P. was given an aggregate 6.9 per cent and in case of service tax it was about 7.5 per cent. For its share of 2.87 per cent, Talangana has been projected to get Rs. 9,700 crore for 10 months in the current fiscal as the share for first two months was spent in united A.P.
