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The government on Thursday released Rs 1.78 trillion to States in tax devolution, including an advance instalment of Rs 89,086.50 crore, in view of upcoming festive season and to accelerate capital spending, a statement by the finance ministry said.
“It includes one advance instalment, in addition to the regular instalment due in October, 2024… This release is in view of the upcoming festive season and to enable States to accelerate capital spending, and also finance their development/welfare-related expenditure,” the finance ministry statement said.
State-wise breakup of the data shows highest devolution to Uttar Pradesh at over Rs 31,000 crore, followed by Madhya Pradesh and West Bengal at over Rs 13,987 crore and Rs 13,404 crore, respectively.
By norm, money from the divisible tax pool is devolved to States in 14 annual instalments: 11 in 11 months and three in March.
The government is projected to share about 32.5 per cent of central taxes with States during the financial year 2024-25, against the 15th Finance Commission’s recommendation of 41 per cent, according to the Union Budget Estimate FY25.
The States’ share has been lower due to cess and surcharge imposed by the Centre, which are not shared with States. States have often complained about lesser devolution compared to the recommendations of the Finance Commission.
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The provisional estimates for FY24 too show a similar share of States in the central taxes at 32.6 per cent. In absolute terms, however, compared to the provisional amount of Rs 11.3 trillion, the Budget Estimate for FY25 shows an increase in the amount devolved to the States to Rs 12.5 trillion.
Table: State-wise tax devolution
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