Centre-State Tax Dispute: Who Loses More?

The Centre-state tussle over tax revenue has resurfaced, with states alleging that the Union government’s growing reliance on cesses and surcharges is reducing their share of total revenue. While the Budget projects ₹12.2 trillion in tax devolution, past trends indicate shortfalls. States like Tamil Nadu argue that bypassing Finance Commission recommendations creates fiscal imbalances, forcing them to rely on grants and borrowing. The Centre defends its approach, citing targeted spending needs, but experts call for a more transparent revenue-sharing model. As tensions persist, the debate over India’s fiscal federalism and equitable resource distribution remains unresolved.