The Government today addressed concerns regarding the tax devolution of some states, emphasizing that it is solely based on the recommendations of the Finance Commission. Finance Minister Nirmala Sitharaman clarified that the Centre plays no role in the matter, stating that the apprehension of discrimination against certain states is a politically influenced narrative.
Responding to questions during the Lok Sabha’s Question Hour, Finance Minister Sitharaman addressed allegations made by Congress leader Adhir Ranjan Chowdhury. Chowdhury had claimed that injustice was done to Karnataka and other non-BJP ruled states with a reduction in tax devolution.
Minister Sitharaman asserted that the tax devolution system is well-established, and she lacks the discretion to manipulate Finance Commission recommendations. She highlighted that the Commission engages with various stakeholders before submitting its recommendations.
Regarding the Goods and Services Tax (GST), Minister Sitharaman clarified that State Goods and Services Tax (SGST) goes entirely to the states, while Integrated Goods and Services Tax (IGST) is collected due to interstate payments and is subject to periodic review. She added that CGST is divided as per the commission’s advice, and rate fixation is unrelated to the Centre.
Minister Sitharaman emphasized that the government is committed to a fair and transparent system, and decisions related to tax devolution are guided by the recommendations put forth by the Finance Commission. The clarification aims to dispel any misconceptions about the Centre’s involvement in state tax devolution matters.