Bengaluru: In a major shocker to Karnataka, the state will see the worst effects under the new central tax-sharing formula that has been adopted. As per reports, even though the 15th Finance Commission recommended that the state be given a special grant of Rs 5,495 crores for 2020-21, the Centre seems to be unwilling to pay the amount, causing the Karnataka Chief Minister B S Yediyurappa some worry.

It is reported that the Centre has asked the Commission to review their proposal.

The report by the Commission was tabled in the Lok Sabha during the Union Budget on February 1. Along with Karnataka, Telangana, Mizoram and Kerala also had their tax-sharing ratios decreased.

The ratios have changed as the Commission had changed he weightage given to certain criteria like population, area, forest cover, income distance, demographic performance and tax effort.

Reportedly, Karnataka’s share decreased from 4.7% to 3.6%. As per the new tax-sharing ratios, Karnataka will get only Rs 31,180 crores in 2020-21 as opposed to the Rs 36,675 crores it earned in 2019-20.

Noting the sharp fall, the Commission had recommended that a special grant of Rs 5,495 crores be paid to the state.

The Centre’s refusal to pay the amount has prompted the Karnataka government to take up the issue with the former.

As per a report by TOI, Karnataka Chief Secretary T M Vijay Bhaskar said that the reduction in the tax sharing comes at a time when the state is seeing a tough financial situation.

He added that steps are being taken to “ensure that Karnataka gets justice”.

Officials have said that they will now be focusing on correcting the formula for tax-sharing and ensuring that the state gets a fair share in the next few years.