Explanation – The vertical distribution of tax revenue in India refers to sharing of tax revenue between the Central and State governments. This distribution is mandated by Article 280 of the Constitution, which requires the Finance Commission to make recommendations about the division of net tax income, commonly known as vertical and horizontal devolution, between the Union and the states and among the states. The share of states in the central taxes for the 2021-26 period is recommended to be 41%, as per the key recommendations of the 15th Finance Commission.

Source: Forum IAS