The Union Cabinet has approved the Terms of Reference for the 8th Central Pay Commission, chaired by Justice Ranjana Prakash Desai, to revise pay, allowances, and pensions for 12 million employees and pensioners. The panel will report in 18 months, with recommendations effective from January 1, 2026.
Click to View MoreFiscal relations in India define how financial powers, taxation rights, and expenditure responsibilities are shared between the Centre and the States. The introduction of GST has centralised major taxation powers, reducing States’ fiscal autonomy and increasing their dependence on Central transfers, which account for about 44% of their total revenues. Rising cesses and surcharges outside the divisible pool further limit States’ resources. To strengthen cooperative fiscal federalism, India needs reforms such as expanding States’ tax share, including cesses in the divisible pool, rationalising centrally sponsored schemes, and empowering local governments for better fiscal balance and accountability.
Click to View MoreThe CAG report warns against unsustainable state debt, stressing that unchecked borrowing risks economic stability. A balanced strategy of fiscal discipline, improved revenues, and strategic spending, with Centre-state cooperation, is essential to protect long-term growth, stability, and federal harmony.
Click to View MoreThe GST reform aims to simplify the indirect tax regime, reduce compliance costs, and address the inverted duty structure. Despite potential inflation and revenue concerns, this reform is crucial for tax administration, formalization, and cooperative federalism.
Click to View MoreThe GST Compensation Cess is an additional tax levied on specific goods and services to compensate states for revenue losses incurred due to the implementation of GST. It was introduced because GST is a consumption-based tax, causing manufacturing states to lose revenue. Initially for five years, its collection has been extended to March 31, 2026.
Click to View More
© 2025 iasgyan. All right reserved