Own tax reliance rising for states

REVENUE CAPACITY CONTINUES TO VARY WIDELY AMONG STATES, SAYS CAG REPORT

- FE BUREAU

STATES' OWN TAX revenue continued to be their single largest source of income in 2023-24, underscoring its growing importance for fiscal autonomy even as sharp interstate disparities persist, according to the State Finances 2023-24 report of the Comptroller and Auditor General of India (CAG).

In 2023-24, the combined States' Own Tax revenue (SOTR) of all 28 states stood at about ₹18.8 lakh crore, accounting for nearly 50% of their total revenue receipts and 6.49% of aggregate Gross State Domestic Product (GSDP).

Over the past decade, SOTR has averaged around 47% of states' revenue receipts, pointing to a gradual shift towards own-resource mobilisation, even as transfers from the Union government remain significant.

The introduction of the Goods and Services Tax (GST) has reshaped both the composition and growth trajectory of SOTR. In the post-GST period, average annual SOTR growth accelerated to about 11.7% during 2018-19 to 2023-24, compared with 10.5% in the pre-GST years.