Question 17

The new Centre-State tax sharing model promised a 10% increase in the State’s share. This 10% increase will result from increasing the share from

Solution

The Narendra Modi government accepted recommendations of the 14th Finance Commission for increasing share of states in central taxes to 42%.

The commission recommended increase in the share of states in the centre's tax revenue from the current 32% to 42%-the single largest increase ever recommended. The recommendation, which the government will likely accept, will give more power to states in determining how they spend this money (it also correspondingly reduces the fiscal resources available to the centre).

Hence, option A is the correct answer.

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The new Centre-State tax sharing model promised a 10% increase in the State’s share. This 10% increase will result from increasing the share from

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