Centre, States equal stakeholder in GST, revenues shared equally: Govt source
GST
Dated:- 18-8-2025
PTI
New Delhi, Aug 18 (PTI) Amid concerns about the revenue impact of the Centre's pro-middle-class 'Next Gen GST' with a proposed two-slab structure, government sources clarified that the Centre is an equal partner in revenue sharing with the states and that its proposal anticipates a revenue boost over time, driven by increased consumption.
Under the current Goods and Services Tax (GST) framework, revenues are shared equally between the Centre and the states. Additionally, 41 per cent of the Centre's share of the divisible tax pool is allocated to states as per the Finance Commission's recommendations.
“Centre has equal conc
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to the Group of Ministers on GST rate rationalisation a 2-tier rate structure of 5 per cent and 18 per cent for ‘merit’ and ‘standard’ goods and services, and a 40 per cent rate for about 5-7 goods. The proposal entails doing away with the current 12 and 28 per cent tax slabs.
Currently, states have exclusive taxation rights over land and petroleum products. Also, the Centre, under a special assistance scheme, is giving a 50-year interest-free loan for capital expenditure to states.
Besides, the health and education cess and other cess collected by the Centre go towards funding state development and welfare needs through various central government schemes and initiatives.
Compensation cess, which goes entirely to the states, accounts
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