Majority of states want 50% share in tax revenue from Centre: Finance Commission chairman Arvind Panagariya

A majority of 28 states have asked the Finance Commission to increase tax revenue distribution between the Centre and states to 50 per cent, the panel's chairman, Arvind Panagariya, said on Wednesday.

UP among other states wants a 50% revenue share from Central govt

At present, states get 41 per cent of the tax revenue while the rest goes to the Centre.

At a press conference with other commission members at Lucknow, Panagariya told reporters, "The previous finance commission had set the (tax revenue) share at 41 per cent for states and 59 per cent for Centre. That's how it is now."

"Like most other state governments, UP has also asked for the share to be raised to 50 per cent from the present 41 per cent. Of the 28 states, more than 22 have made this recommendation," he added.

However, the chairman declined to reveal if the Finance Commission would include the recommendations to the President.

"Practically speaking, I can't tell you (the press) what the commission will do because I also don't know it yet as it's a decision of full membership of the commission. What I can speculate though is it is not going to be 50 per cent because that would be too large a jump and such a large jump upsets too many cards," Panagariya said, quoted PTI.

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About the Finance Commission

The 16th Finance Commission of India was constituted on December 31, 2023, under Article 280 of the Constitution.

Its primary mandate is to recommend the distribution of tax revenues between the Centre and the states, for five years starting from April 1, 2026.

The Commission is expected to submit its report by October 31, 2025, for 2026-27 to 2030-31.

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