State’s Own Tax Revenue set to grow at 14.60 percent, says FM Thangam Thennarasu

Chennai, Mar 14 (PTI) Tamil Nadu's State Own Tax Revenue (SOTR) is estimated to grow at 14.60 per cent in 2025-26, taking into account the growth in the state’s economic activity, revision of taxes and improvement in collection efficiency, Finance Minister Thangam Thenarasu said on Friday.

In the current economic scenario, Tamil Nadu’s growth was higher than the national GDP, which was a positive sign. "This growth advantage is expected to continue in the coming year. Through steps such as resource augmentation and improvement in revenue collection efficiency, the state will attempt to maintain a healthy growth in revenue receipts," he said.

The state will continue to strive to increase investment and expenditure in growth and welfare-oriented areas, the Minister emphasised.

Presenting the Budget Estimates for the year 2025-26 in the Assembly, Thennarasu said the SOTR was projected at Rs 2,20,895 crore, which included an amount of Rs 1,63,930 crore for Commercial Taxes, Rs 26,109 crore for Stamps and Registration, Rs 13,441 crore for Motor vehicle Taxes and Rs 12,944 crore for State Excise.

In 2024-25, the SOTR was estimated at Rs 1,92,752,43 crore in Revised Estimates, as compared to the projections of Rs 1,95,173 crore made in the Budget Estimates.

The State’s Own Non-Tax Revenue was estimated at Rs 28,124 crore in Revised Estimates, as compared to Rs 30,728 crore in the Budget Estimates 2024-25. In the year 2025-26, the State’s Own Non-Tax Revenue was estimated at Rs 28,819 crore in the Budget Estimates.

"In sum, the State’s Own Revenues are estimated at Rs 2,49,713 crore, which constitutes 75.31 per cent of the Total Revenue Receipts in the Budget Estimates 2025-26," he said.

The State’s Own Revenues have been increasing due to the efforts of the Tamil Nadu government, despite a significant reduction in the central transfers in the form of Grants-in-aid and share in central taxes as a proportion of total revenue receipts from the Centre, Thennarasu said.

"Withholding of funds under Samagra Shiksha, denial of funds under NDRF for Cyclone Fengal, a paltry release of Rs 276 crore for two massive disasters in the form of Cyclone Michaung and the unprecedented rainfall in southern districts, have all caused a severe strain on the State Finances," the Minister said in his speech targetting the Centre for the alleged decrease in central funding and thrusting three language policy.

Anticipating the release of the entire funds due to the state under Samagra Shiksha in the ensuing year, the grants-in-aid receivable from the Union Government was estimated at Rs 23,834 crore in the Budget Estimates 2025-26, he pointed out.

On the 'withholding' of Rs 2,152 crore to Tamil Nadu by the Centre citing the state’s non-acceptance of the union government’s New Education Policy, which included the three-language policy, the Minister said keeping in mind the welfare of students, the state government has allocated funds, including salaries of teachers, from its own resources to ensure the education of government school students remained unaffected.

The share in Central Taxes was estimated at Rs 58,022 crore in the Budget based on the Union Government’s budgetary allocation. "When seen in comparison to our contribution of 9 per cent to the nation’s economy and 6 per cent of the Country’s population, the 4 per cent share in central taxes is a gross injustice to the state," Thennarasu claimed.

The total funds received from the Centre as a percentage of the Gross State Domestic Product (GSDP) to Tamil Nadu has seen a constant and precipitous fall in the past few years, reducing from a high of 3.41 per cent of GSDP in 2016-17 to a meagre 1.96 per cent in the Revised Estimates 2024-25, the Minister said.

In 2025-26, the Total Revenue Receipts are projected at Rs 3,31,569 crore, which is an increase of 12.81 per cent over the Revised Estimates.

On the expenditure front, he said in 2025-26, the Total Revenue Expenditure has been estimated at Rs 3,73,204 crore, showcasing a growth of 9.65 per cent over Revised Estimates 2024-25.

In line with the government’s efforts to boost capital expenditure, the projections for 2025-26 were made at Rs 57,231 crore, which is a growth of 22.38 per cent over Revised Estimates. The total capital outlay of the state including net loans and advances is estimated at Rs 65,328 crore.

The Revenue Deficit is estimated to further reduce to Rs 41,635 crore.

The Fiscal Deficit is estimated to be Rs 1,06,963 crore, equal to 3 per cent of the GSDP, showcasing the Government’s commitment to the path of fiscal consolidation.

The outstanding Debt to GSDP ratio is expected to decrease to 26.07 per cent of the GSDP, well within the target of 28.70 per cent for the year 2025-26 prescribed under the 15th Finance Commission.

The government planned to borrow Rs 1,62,096.76 crore during 2025-26 and make repayment of Rs 55,844.53 crore. As a result, the outstanding borrowing as on March 31, 2026, will be Rs 9,29,959.30 crore.

"This constitutes 26.07 per cent of GSDP in 2025-26. The outstanding debt as a percentage of GSDP is expected to be 25.49 per cent in 2026-27 and 24.85 per cent in 2027-28. Therefore, the state aims to maintain debt sustainability as part of its fiscal consolidation roadmap," Thennarasu said. PTI JSP ROH

Source: PTI