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States » EastPosted at: Mar 20 2025 10:19PM


Bihar demands 50 percent share from Centre for States in divisible pool of taxes

Patna, Mar 20 (UNI) Bihar has demanded a 50 percent share from the Centre for states in revenue earned in divisible funds through various taxes across the country.
Arvind Panagariya, Chairman of the 16th Finance Commission, told media persons here that Bihar had demanded 50 percent shares for states in divisible funds created after the collection of various taxes by the Centre across the country.
The existing share of 41 percent for states in divisible funds was not enough to meet the expenses against various development and welfare projects besides committed expenditure, he quoted from the memorandum submitted to the Finance Commission by the Bihar government.
" The revenue collected by the central government through cess and surcharges has significantly increased over the years. Since this revenue is not shared with states, the rising collection from cess and surcharges is often seen as a loss of revenue for the state government as these collections are not included in divisible pool.
Therefore, the current Finance Commission is requested to consider including cess and surcharges in divisible pool ", Chairman of the Finance Commission said while giving details of the memorandum submitted by the Bihar Government. Request for at least fifty percent of the net proceeds of central taxes should be shared with state governments, had also been received from Bihar, he added.
Panagariya said that Finance Commission followed two key criteria population and area while determining how to distribute revenue from the Central government among the states. Bihar Government pointed out in a memorandum that higher population density often experienced significant revenue losses due to the inclusion of area as a criterion and in contrast densely populated and least developed regions faced more substantial challenges to their development, he added . The formula for resource transfer should prioritise population density to address these issues, he informed while sharing details of memorandum by Bihar government.
Chairman of the Finance Commission said that all suggestions and demands from Bihar would be discussed in the meeting of Commission. At this stage, nothing could be said about the stand of the Finance Commission on demands made by Bihar, he stated. There was still a lot of time to decide on such issues by the Commission, he remarked.
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Tags: #Bihar demands 50 percent share from Centre for States in divisible pool of taxes
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