*Yday, I had published a detailed post on LinkedIn, talking about how if I were PM Modi or Nirmala Tai, the least I would do tell the masses how the tax revenue is distributed 🙏🙏* And the response the post got was in line with my premise that much of India’s educated folks don’t know that 41% of all taxes collected by the Centre are transferred to state Govts (minus cess and surcharge). Thus, sharing the text of the same here as well. .. *Most Indians don’t even know that when they pay any form of tax, be it GST, income tax, excise, or customs, the Centre collects it but then redistributes 41% to the states.* -> In fact, till 2015, this used to be 32% -> Then the share was raised to 42% for 2015-20 period to support states in powering growth and bettering their finances -> And considering the Centre’s increased expenditure on J&K and Ladakh after turning those into UTs, this was lowered to 41% for the 2021-26 period This mechanism, established by the Finance Commission, ensures the equitable distribution of resources across India's diverse states, helping balance regional disparities. For instance, Maharashtra, Gujarat or Tamil Nadu would still do okay if not for this money. But, economies like Punjab, Himachal, and even Karnataka would go bankrupt 🙏🙏 .. *Let me explain this better with the example of GST.* -> The revenue is theoretically split 50% between the Centre and the states, but in practice, states also take 41% of the CGST -> This means states end up with about 70.5% of the total GST collected The public does not notice this, blaming the Modi Govt for the tax burden without understanding that 70%+ of the taxes on popcorn, sanitary pads, and health insurance support state budgets, not union budgets. In fact, state finance ministers hold 2/3rds of the voting rights in the GST Council. Thus, GST rate decisions are primarily influenced by them, and not just by the eponymous Tai. And one might counter that BJP rules majority of the states as well. But, there are plenty of instances when BJP's state finance ministers have not voted in sync with Nirmala Sitharaman in these meetings of the GST Council 🙏🙏 .. *See, this isn't to absolve the Centre of all responsibility.* I am just as angry and burdened as most others and have also been actively writing about my disappointment on this subject. *All I am saying is* - The states are significant partners in this fiscal dance, both in deciding and benefiting from the taxes 🙏🙏 Thus, if I were PM Modi and Nirmala Tai, to quell the growing discontent, I would put all my machinery into communicating this complex reality better. .. *Support my work:* https://t.ly/SUPPORTjay *Check my work with:* - 3k+ on Decoding The Dragon (https://t.ly/chnwj) - 2.7k+ on Deepdives with Jay (https://t.ly/dwj) - 2.1k+ on BharatNama (https://t.ly/bwj) Best, Jayant Shilanjan Mundhra