New Delhi: Rajya Sabha MP and Former Deputy Chief Minister of Bihar Sushil Kumar Modi has raised an alarm on the changing pattern of Centre-State financial resources distribution that is evidently in favour of the Centre.
Speaking at a webinar organised by the Centre for Policy Research (CPR) Saturday, Modi said that states are raising concerns over shrinking share of divisible pool of taxes because of growing ‘cess and surcharge’ component.
"The share of divisible pool is slowly shrinking. .. So one of the issues which states are raising (is) because under the Constitution, cess and surcharge is not under divisible pool," said Modi, who also headed a seven-member committee that was tasked to look into revenue shortfall being faced by the states after the GST roll-out.
Modi, in his speech, pointed out that cess and surcharge which was 10.4 per cent of gross tax revenue (GTR) in 2011-12, has increased to 20.2 per cent now. Even after deducting GST compensation cess, which goes entirely to states it is above 15 per cent.
As per the Constitution of India, the divisible pool consists of taxes like income tax, excise duty and corporation tax among others, while cess and surcharges do not come under it.