News Tamil Nadu

Alleged Fact-Checker YouTurn Peddles Fake Propaganda About TN Getting 29 Paise For ₹1 Contributed

January 6, 2025
The Commune

On 2 January 2025, the DMK’s mouthpiece, Youturn, claimed that Tamil Nadu receives only 29 paise for every rupee it contributes in taxes to the central government. Let’s fact-check this claim to unpack the issue.

What Is YouTurn, The “Fact Checker”, Claiming?

YouTurn alleged that Tamil Nadu receives only 29 paise for every rupee it contributes in taxes to the central government. They criticized the central government for retaining a significant portion of tax revenues through cess and surcharge, leaving states with less than their due share. They also highlighted disparities in revenue returns, pointing out that states like Bihar and Uttar Pradesh receive far more in comparison.

Tax Contributions and Refunds:

    • Tamil Nadu paid ₹1,07,063 crore in direct taxes and ₹27,361 crore in CGST during the financial year 2022-23, amounting to ₹1,34,424 crore in total contributions.
    • The state allegedly received ₹38,731 crore in return, which accounts for just 29% of the amount paid.
    • They compared this with states like Bihar and Uttar Pradesh, claiming they receive ₹7.06 and ₹2.73, respectively, for every rupee contributed.

Cess and Surcharge Concerns:

    • They accused the central government of increasing cess and surcharge collections, which are not shared with states.
    • They claimed only 32% of total tax revenue is distributed to states, a figure that falls below the constitutionally mandated 41%.

YouTurn stated that the central government operates with 68% of the tax revenue while giving only 32% to states, suggesting a skewed federal structure.

What’s The Truth?

YouTurn’s claims are misleading, as they only seem to be focusing narrowly on direct tax refunds while ignoring indirect tax revenues and central welfare schemes. It is important to note that Tamil Nadu benefits significantly from GST revenue sharing and centre-funded development projects.

Misrepresentation of Tax Sharing:

    • The calculation focuses solely on direct taxes while ignoring the share of indirect taxes like CGST, SGST, and IGST.
    • Tamil Nadu receives 41% of CGST collections, 100% of SGST collections, and 50% of IGST generated within the state.

Welfare Schemes and Federal Spending:

    • Cess and surcharge collections are used to fund welfare schemes and infrastructure projects nationwide, benefiting Tamil Nadu among other states.
    • Projects like new medical colleges, national highways, health insurance schemes, and farmer welfare programs have been funded significantly in Tamil Nadu.

Revenue Sources in Tamil Nadu:

    • Taxes paid by corporations in Tamil Nadu, such as Hyundai and Nokia, are national-level revenues. These contribute to central government funds, which are then redistributed to all states, including Tamil Nadu.

Federal Fairness:

    • Under Prime Minister Narendra Modi’s leadership, tax revenues have been fairly distributed, with Tamil Nadu receiving its due share alongside several welfare and development projects.

It is noteworthy that tax sharing between the centre and states involves direct and indirect taxes, but the focus on specific categories (e.g., direct taxes) can mislead public perception.

The claim that Tamil Nadu receives only 29 paise for every rupee contributed in taxes oversimplifies a complex federal revenue-sharing system. While the state’s direct tax refunds may be low, the overall benefits, including indirect tax revenues and welfare schemes, paint a broader picture.

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