Home / Opinion / Columns / Going truly federal: Why states should be allowed to levy an income tax

Going truly federal: Why states should be allowed to levy an income tax

We need to ask why, in India, income tax is levied only by the Centre while in many other federations, the constituent units also levy it

Premium

3 min read Last Updated : Nov 28 2022 | 10:55 AM IST

The finance minister met state finance ministers recently for a pre-Budget meeting. As expected, they told her they wanted more money. How much more they eventually get depends on their negotiating skills and the Centre's bloody-mindedness. Time will tell.

More importantly, this tussle with the Centre for money is several decades old, underscoring a huge problem with our federal arrangements. On the one hand, is the political reluctance of the states to tax their residents more to raise revenue. On the other, the constitutional scheme of things gives the Centre overwhelming power on financial matters and limits the revenue instruments

Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

What you get on BS Premium?

Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
Pick your 5 favourite companies, get a daily email with all news updates on them.
Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
Preferential invites to Business Standard events.
Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.

VIEW ALL FAQs

Need More Information - write to us at assist@bsmail.in