Southern States Challenge Tax Devolution: A Call for Fairness

Finance Minister Nirmala Sitharaman addressed southern states' concerns regarding tax money devolution, emphasizing that the 16th Finance Commission will determine the allocation formula. Southern states argue they are at a disadvantage due to their lower population growth compared to northern states. The Finance Commission recommendations highly influence how revenues are distributed.

Finance Minister Nirmala Sitharaman has urged southern states to present their grievances regarding tax money devolution to the 16th Finance Commission. The commission's upcoming recommendations will influence the distribution of funds across the country.

Southern states, having successfully controlled their population growth, feel overshadowed by their northern counterparts in revenue distribution. Sitharaman clarified that the Finance Commission, not the central government, determines the tax devolution formula.

The minister highlighted the need for states to engage with the commission to address their concerns about fairness in tax revenue allocation. The 16th Finance Commission, headed by Arvind Panagariya, is set to provide its recommendations by October 31, 2025.

(With inputs from agencies.)