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LATEST NEWS UPDATES | Centre owes over Rs. 81,000 cr. to States

Centre owes over Rs. 81,000 cr. to States

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published Published on May 24, 2016   modified Modified on May 24, 2016
-The Hindu

The amount is tax share of last 10 years

The Centre owes over Rs. 81,000 crore to States as tax shares of last 10 years, according to a finding by the Comptroller and Auditor-General of India.

According to details of communication between the CAG and the Finance Ministry, between 1996-97 and 2014-15, the Centre has failed to devolve to States Rs. 81,647.70 crore. Just in 2006-07 the Centre did not disburse Rs. 10,022.89 crore while in 2014-15 it went up to Rs. 17,322.14 crore. Almost every year has shown such shortages in disbursements.

The difference was discovered during an audit and certification process by the CAG of the net proceeds of taxes and duties for the period. Under Article 279 (1) of the Constitution, the CAG has to ascertain and certify the details of net proceeds of the Centre and its distribution to States.

The 80 amendment to the Constitution in 1996 made dramatic changes to the way taxes were shared by the Centre with the States. Prior to the amendment, taxes on income other than agricultural income and a part of union excise duties were only required to be shared with the States. However, the 80 amendment made it mandatory to share proceeds from other taxes and duties, such as corporate tax, customs, service tax and some aspects of union excise duties.

But the process of verification and certification stopped several years ago because of doubts over specifics of the new amendment.

The CAG did not issue any certificates after 2009, now it turns out. Auditors have found that certificates have not been issued for excise duties and custom duties from 1996-97, for indirect taxes from 1999-2000 and for direct taxes from 2005-06.

In a letter written by Balvinder Singh, Deputy CAG, to the Secretary, Department of Economic Affairs, on February 19, “The total amount to be further devolved to the States comes out to Rs. 81,647.70 crore.”

According to details attached to his communication, the percentage of share, of the Centre’s tax and duty collections, to be given to States in 1996-97 was 29 per cent, while it has now gone up to 32 per cent in 2014-15. According to sources, of this amount, a large State like Uttar Pradesh could end up getting around Rs. 7,000 crore. Other big States would also get significant amounts in that region. Even for smaller States, it could be a windfall.

The Hindu, 24 May, 2016, http://www.thehindu.com/news/national/centre-owes-over-rs-81000-crore-to-states/article8637890.ece?w=alauto


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