Delhi Chief Minister Arvind Kejriwal has said that the national capital should be included in the 15th Finance Commission, on the lines of Jammu and Kashmir, so that it might get a higher share of central taxes.
The Finance Commission, established under Article 280 of the Constitution of India, provides for the distribution of net tax proceeds from the Centre to states and also determines the principles governing grants-in-aid of revenue of state from the Consolidated Fund of India. However, the Commission does not consider Union Territories as states or determine any principles for grant-in-aid.
Owing to its status as a UT, Delhi gets a fixed sum of funds from the Union home ministry. In an interview with The Economic Times, Kejriwal said this sum was far less than what Delhi contributed as income tax.
"Delhi contributes Rs 1.75 trillion as income tax to the Centre but gets back only Rs 325 crore for its own development. We are second only to Mumbai in our tax contribution but get funds lower than Goa (Rs 3,500 crore) and Gujarat (Rs 2,500 crore)," Kejriwal said.
He cited Jammu and Kashmir's example to say that a similar exemption should be made for Delhi as well.
The Jammu and Kashmir Reorganisation Act, 2019, provides for the President to refer to the 15th Finance Commission to include the Union Territory of Jammu & Kashmir in its Terms of Reference. This will allow J&K, now a UT with legislature, to receive the benefits of devolution of central taxes, something that it had been previously enjoying as a “state”.
"Jammu & Kashmir was made a UT (with legislature). Delhi was left out. They should include Delhi too. The Centre bears the cost of the Union Territory. Then, there is a state that has its own budget and expenditure. Delhi is neither a state nor a Union Territory," Kejriwal said.
"We have already filed a case in the Supreme Court that terms of the Finance Commission should be amended and Delhi should be included in that," he said.
In an interview with Business Standard last month, Chairman NK Singh had said the Fifteenth Finance Commission was not considering the demands of Delhi and Puducherry to give them a share of the divisible central tax pool in line with other states.
“We are not formally considering the memorandum of Puducherry and Delhi because under the Constitution, we are not enjoined to do so, and we have to strictly act in accordance with the Constitution,” Singh had said in an interaction earlier this month.