Government Allocates Over Rs 1.73 Lakh Crore to States from Tax Shares
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New Delhi, Jan 10 (NationPress) The government has disbursed a total of Rs 1,73,030 crore to state administrations as part of tax devolution, marking an increase from Rs 89,086 crore in December 2024.
This increase in funds aims to support states in enhancing their capital expenditure and addressing development and welfare-related financial needs, as stated by the Union Finance Ministry.
A total of 26 states are included in the funding package announced on Friday.
The allocation comprises 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 received Rs 31,039.84 crore, Maharashtra Rs 10,930.31 crore, Gujarat Rs 6,017 crore, Madhya Pradesh Rs 13,582.86 crore, Manipur Rs 1,238.9 crore, and Meghalaya Rs 1,327.13 crore.
Tax devolution refers to the allocation of the net proceeds from taxes collected by the Union government to the states. The Centre distributes these taxes in regular installments based on the recommendations of the Finance Commission (FC).
The FC recommends the distribution of states' shares from the total net tax proceeds, which encompasses corporation tax, personal income tax, and central GST.
The 15th Finance Commission has advised that 41 percent of the Central government's divisible tax pool be allocated to states for the duration of 2021-2026, a process known as vertical devolution.
Additionally, the 15th FC set forth criteria for horizontal devolution, which includes parameters like “income distance” reflecting the disparity in a state's income compared to that of the state with the highest per capita income, the size of the state's population based on the 2011 Census, and the proportion of dense forests within each state.
The robust tax collection in an expanding economy has empowered the Centre to allocate a greater share of taxes to the states.
