Karnataka demands greater share of central tax pool

Karnataka Chief Minister Siddaramaiah on Friday demanded greater share of funds for the state from the central tax pool.

Siddaramaiah said that there had been a “stark imbalance in fiscal returns” despite Karnataka contributing about 8.7% of the national gross domestic product and ranking second in Goods and Services Tax collections with just 5% of India’s population.

The chief minister said that the cut in Karnataka’s share under the 15th Finance Commission from 4.7% to 3.6% had resulted in a cumulative loss of more than Rs 80,000 crore between the financial years 2020-’21 and 2025-’26, PTI reported.

Siddaramaiah’s request came during a meeting with 16th Finance Commission Chairman Arvind Panagariya. The commission, set up in December 2023, will recommend distribution of tax revenue between the Union government and the states for a five-year period between the financial years 2026-’27 and 2030-’31.

Karnataka pays Rs 4.5 lakh crore in taxes every year, Siddaramaiah said, adding that the state received only 15 paise in return for every Re 1 it contributes to union taxes. “This injustice should not happen in the 16th Finance Commission,” the chief minister’s office said in a statement.

To make the “formula fairer, Karnataka has proposed reducing the weight of the income-distance criterion and giving more weight to a state’s economic contribution, so that high-performing states are not penalised,...

Read more