Karnataka Chief Minister D.K. Shivakumar on Wednesday, 14 October 2026, announced that the state government will submit a formal proposal to the GST Council seeking a share of Goods and Services Tax (GST) revenue for rural and urban local bodies. The move is aimed at improving the financial position of grassroots governance institutions and deepening decentralisation across Karnataka.

Key Announcements from the Meeting

Shivakumar made the announcement after chairing a meeting of the Karnataka State Decentralisation Planning and Development Committee at his official residence, Krishna, in Bengaluru. He also indicated that a proposal would be sought from the minister concerned on establishing a Karnataka Panchayat Administrative Service, a dedicated administrative cadre for panchayat governance.

The government will constitute a committee under the chairmanship of the Rural Development Minister to examine the recommendations of the Fifth State Finance Commission on financial devolution and administrative reforms. The committee will assess implementable recommendations and submit a report.

Funds Released to Panchayats

According to Shivakumar, the state has already disbursed significant funds in line with the Fifth State Finance Commission report. ₹1,261 crore has been released to gram panchayats, ₹557 crore to taluk panchayats, and ₹183 crore to zilla panchayats. These disbursements signal the government's stated commitment to financial empowerment at the grassroots level.

Urban Local Bodies and Constitutional Mandate

The Chief Minister stressed that urban local bodies must function effectively in line with the objectives of the 74th Constitutional Amendment, which mandates devolution of powers to urban governance bodies. The government plans to consult experts from the National Law School of India University on relevant legal amendments. Shivakumar also directed urban local bodies to formulate development plans through ward meetings, mirroring the gram sabha model used in rural areas.

Grassroots Planning and Revenue Concerns

Shivakumar directed officials to expedite the demarcation of village habitation boundaries using data from the SVAMITVA scheme, with the Panchayat Raj and Revenue departments working in coordination. He also expressed concern over a reduction in gram panchayat revenue following the withdrawal of their authority to levy taxes on industries by the Karnataka Industrial Areas Development Board (KIADB). The law provides for 30 per cent of property tax collected by the authority to be shared with gram panchayats, and Shivakumar directed officials to submit a full account of collections and distributions. District, taluk, and village-level planning committees, already constituted, were directed to hold meetings every three months and submit regular reports. The state budget's 'People's Plan' initiative — designed to channel grassroots public demands into state budget planning — was also flagged for expedited implementation, with instructions to the Rural Development and Urban Development departments to issue guidelines and build supporting software.

Whether the GST Council accepts Karnataka's revenue-sharing proposal will determine how meaningfully these ambitions translate into fiscal reality for India's local bodies.