New Delhi, Jan 10 The Centre released tax devolution of Rs 1,73,030 crore to the state governments on Friday, up from the devolution of Rs 89,086 crore in December 2024.
A higher amount is being devolved this month to enable states to accelerate capital spending and finance their development and welfare-related expenditures, the Union Finance Ministry said.
As many as 26 states have been listed in the package announced on Friday.
The funds released include Rs 13,017.06 crore for West Bengal, Rs 7,002.5 crore for Andhra Pradesh, Rs 6,310 crore for Karnataka, Rs 5,412 crore for Assam, Rs 5,895 crore for Chhattisgarh, Rs 14,317 crore for Himachal Pradesh, Rs 3,330.83 crore for Kerala, Rs 3,126.65 crore for Punjab, and Rs 7,057.89 crore for Tamil Nadu.
Among the other states, Uttar Pradesh has got 31,039.84 crore, Maharashtra 10,930.31, Gujarat 6,017 crore, Madya Pradesh 13,582.86 crore, Manipur 1,238.9 crore, and Meghalaya 1,327.13 crore.
Tax devolution is the process of distributing the net proceeds of taxes collected by the Union government to the states. The Centre distributes taxes to states in regular instalments based on the recommendations of the Finance Commission (FC).
The FC recommends the share of states in the total net proceeds of all taxes, including corporation tax, personal income tax, and central GST.
The 15th Finance Commission recommended that 41 per cent of the Central government's divisible tax pool be allocated to states for the period 2021-26. This is known as vertical devolution.
The 15th FC also recommended criteria for distributing the funds among states, known as horizontal devolution. These criteria included “income distance” which reflects the difference in a state's income from the state with the highest per capita income, the size of the population of the state as per the 2011 Census and the share of dense forest in each state
The strong collection of taxes in a fast-growing economy has helped the Centre to pass on more taxes to the states.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor