Para 3.23.6 — MSO (Audit)
Original Rule Text
3.23.6 The net proceeds of taxes on income other than agricultural income to be assigned to the States in any financial year under Article 270(2) of the Constitution will be determined in accordance with the terms of the Distribution of Revenue Orders issued from time to time.
What This Means
The net proceeds of income taxes (excluding agricultural income tax) that are to be distributed to states under Article 270(2) of the Constitution are determined according to the Distribution of Revenue Orders issued from time to time. These orders, based on Finance Commission recommendations, specify the formula and percentages for dividing the tax pool among the Centre and states.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Article 270(2) governs the assignment of income tax proceeds to states
- 2Agricultural income is excluded from this distribution
- 3Distribution of Revenue Orders specify the applicable formula
- 4These orders are issued from time to time, typically based on Finance Commission recommendations
- 5The CAG certifies the net proceeds; the orders determine the distribution
Practical Example
The 15th Finance Commission recommends that 41% of net income tax proceeds (excluding agricultural income) go to states. The Distribution of Revenue Order issued accordingly directs that for the financial year, out of certified net proceeds of Rs 8 lakh crore, Rs 3.28 lakh crore be distributed to states according to the formula (population, income distance, area, forest cover, etc.).
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why is agricultural income excluded?▼
How often are Distribution of Revenue Orders updated?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.