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CENTRE STATE RELATIONS(FINANCIAL RELATIONS) (BUT THEIR ARE CHANGING TREND…
CENTRE STATE RELATIONS(FINANCIAL RELATIONS)
CONCERN OF STATES
UNION GOVT. ACTS LIKE A BIG BROTHER(NOT ELDER BROTHER
WHY UNION HAS PREDOMINANT ROLE:
2 REASONS
2: THERE WAS HIGH POVERTY & REGIONAL IMBALANCE
BECOZ 1: AT TIME OF INDEPENDENCE THERE WAS
URGENCY OF ECONOMIC GROWTH
. &
PLANNED ECONOMY WAS IN CONSENSUS
WHAT IS SCHEME OF DISTRIBUTION
SCHEME OF DISTRIBUTION OF RESOURCES
(5 ISSUES)
BY 80TH CONSAA. ALL TAXES ARE LEVIED BY UNION ITS NOT WHOLLY FOR UNION USES. RATHER ITS SHARED WITH STATES AS WELL
CESS & SURCHARGE ARE NOT SHAREABLE
STATE'S CONCERN
: HIGH YIELDING TAXES ARE BROUGHT UNDER UNION.... & STATE TAXES ARE RIGID & LOW YEILDING
2.FOR EQUITABLE DISTRIBUTION OF RESOURCES... FINANCE COMMISSION IS CONS.
STATE CONCERN
NO ROLE OF STATES IN CONSTITUTING THE FC.
STATES ARE ALLOWED TO BORROW FROM UNION & DOMESTIC MARKET AS WELL
STATE'S CONCERN
: IN EVENT OF ANY OUTSTANDING OF LOAN.. STATE ARE NOT ALLOWED TO BORROW FROM DOMESTIC MARKET
PRESENT CONS. LIMITS PROFESSION TAX(ASSIGNED TO STATES) @ RS 2500 PA
STATE GOVT. EXPENDITURE IS HIGHER (BECOZ OF BURDEN OF CSS) & INCOME IS LESS
HOW???
CENTRE HAS A PREDOMINANT ROLE IN DISTRIBUTION OF FINANCES B/W THE UNION & STATES
BUT THEIR ARE CHANGING TREND OF FINANCIAL RELATIONS B/W CENTRE & STATES
SINCE COILATION GOVT.& LPG REFORMS: FINANCIAL DEPENDENCE OF STATES ON UNION HAS REDUCED
FDI INFUSION DUE TO GLOBALISATION
AFTER 10TH FC & 80TH CONSAA. TAX DEVOLUTION FROM CENTRE TO STATE IS INCREASING..LIKE 14TH FC.. RECOMMENDED 42% TAX DEVOLUTION
ONE MAJOR DEVELOPMENT: )
ABLOISHION OF PLANIING COMMIIISION(WHICH BY EXECUTIVE ORDER BECAME INS. FOR DISPERSAL OF DESCRETIONARY GRANTS U/A282 EMERGED AS SUPER CABINET
NOW REPLACED WITH A MORE INCLUSIVE THINK TANK CALLED NITI AYOG
THERE IS EMPHASIS ON COOPERATIVE FEDRELAISM : "SAB KA SAATH SABKA VIKAS"
ADOPTION OF GST: ALSO RECOMMENDED BY 14TH FC AS "ONE INDIA ONE TAX"
GST
BENEFITS OF GST
MAY INCREASE GDP BY 2%.. HOW??: 4 WAYS
2.INDIAN GOODS WILL BECOME MORE COMPETITIVE IN INTERNATIONAL MARKETS
3 MORE INTRA COUNTRY TRADE: AS LESS BARRIERS DUE TO UNIFORM TAXATION
4.WIN WIN SITUATION FOR UNION GOVT ,STATE GOVTS, INDUSTRY & CONSUMER
1.AS GOODS WILL BECOME CHEAPER BY AVOIDING CASCADING OF TAXES
HOWEVER THERE HAS BEEN OPPOSITION BY SOME STATES(MANUFACTURING STATES)LIKE GUJRAT, TAMIL NADU, MAHA ETC
BECOZ GST BEING A DESTINATION BASED TAX
LOSS OF REVENUE
BUT CAN BE MANAGED BYDEVOLVING SOME GRANTS AS PROMISED BY UNION GOVT. FOR 5 YEARS
LOSS OF FISCAL AUTONOMY AS SALES TAX BEING THE REVENUE MOBILIZER FOR STATES NOW WILL GET SUBSUMED INTO GST..
USA WORLD'S FOREMOST CAPITALIST NATION STILL DOESNT HAVE GST
BUT INDIAN FEDERALISM BASIS IS UNITY IN DIVERSITY NOT UNIFORMITY
BEFORE 101ST CONSAA (GST) & AFTER
BEFORE 101:
ART 268A(SERVICE TAX. )
LEVIED: UNION,
COLLECTED BY STATE
SHARED B/W UNION & STATES:
DECIDED BY PARLIAMENT
ART 269: CENTRAL SALES TAX
CST ON INTERSTATE TRADE
IMPORT & EXPORT
(LEVIED:UNION
COLLECTED BY UNION
SHARED B/W UNION & STATES
DECIDED BY PARLIAMENT)
ART 268:
STAMP DUTY
EXCISE DUTY ON TIOLETRY
LEVIED BY UNION
COLLECTD BY STATES & GIVEN ENTIRELY TO STATES
ART 270: SHARABLE B/W UNION & STATES ON ADVICE OF FINANCE COMMISSION
ART 271: CESS & SURCHARGE: COMPLETELY WITH UNION
AFTER 101:
ADDED 246A:
DEALS WITH LEGISLATIVE POWER OF UNION & STATE GOVT.(CONCURRENT POWER).. 1ST TIME A CONCURRENT POWER IN TAX
ART 268: STAMP DUTY IS LEFT BUT EXCISE PROVISION IS DELETED
ART 268A:(SERVICE TAX OMITTED)
ART 269A: ADDED TAX WRT TO INTERSTATE TAX ON IMPORT & EXPORT
ART 270 LEFT AS IT IS
ART 271 AMENDED: SURCHARGE MAY BE LEVIED ON GST
ART 279A
ADDED: IT INTRODUCES GST COUNCIL
FIN MIN AS CHAIRMAN OF GST COUNCIL +
CONSISTS OF STATE MINISTER OF FINANCECS
FUNCTIONS & WORKING
TO RECOMEND
MODEL GST LAWS
ANY SPECIAL TAX FOR SPECIFIED PERIOD(DURING DISASTERS)
ANY OTHER MATTER AS COUNCIL MAY DECIDE
LIKE DATE FROM WHICH GST TO BE LEVIED ON PETROLUEM, & OTHER FUELS
TO RATE OF TAX
ADJUDICATION OF ANY DISPUTE B/W UNION & STATE GOVT.
THIS IS IN CONFLICT WITH ART 131 (ORIGNAL JURISDICTION OF SUPREME COURT) AND PRINCIPLE OF NATURAL JUSTICE
DECISION:WEIGHTED VOTE: 1/3RD WEIGHT OF CENTRE & 2/3 RD OF STATES: AND DECISION BY 3/4TH OF TOTAL WEIGHTED VOTES