States should improve tax base, prevent revenue leakages: MoS finance

In order to reverse the declining ratio of their own tax revenue to gross state domestic product, states need to improve the tax base, prevent revenue leakages, and improve tax compliance by leveraging digitisation and information technology, Pankaj Chaudhary, minister of state in the Ministry of Finance, told Parliament on Monday.

 

Responding to a question about increasing dependency of states on central grants, Chaudhary said, “In the last decade, there has been a substantial increase in devolution of central taxes and duties from the Centre to the states, transfers to states under Centrally Sponsored Schemes (CSS).”

 

States have been provided financial assistance of Rs 4,24,227 crore since 2020-21 under the Scheme of Special Assistance to States for Capital Expenditure and Investment.

 

The minister of state also told the Lok Sabha that a part of the tied grants recommended by the Finance Commission is linked to efforts of the urban local body to increase tax collection.

 

In response to a separate question on SNA-SPARSH, a System for Pension Administration — a Single Nodal Agency, Chaudhary told Parliament that in 2025-26, Mother Sanction amounting to Rs 1,07,918 crore has been issued and a total of Rs 36,995 crore of central share has been released under various CSS through SNA-SPARSH till December 9, 2025.

 

SNA-SPARSH enables just-in-time fund flow from both Centre and state consolidated funds through an integrated network of PFMS-State, FMIS-e-Kuber of the Reserve Bank of India (RBI) under CSS.