Centre releases ₹1.42 trillion in tax devolution to states
NEW DELHI : The Centre released ₹1.42 trillion in tax devolution to states on Thursday, supplementing the ₹72,961 crore disbursed earlier on 12 February. According to the finance ministry, the funds will allow the states to finance various social welfare measures and infrastructure development schemes. "With this release, states have received total of three instalments of tax devolution in February 2024," it added.
Uttar Pradesh led with ₹25,495 crore, followed by Bihar ( ₹14,295 crore), Madhya Pradesh ( ₹11,157 crore), and West Bengal ( ₹10,692 crore) in tax devolution for the third tranche. Smaller allocations were made to Goa ( ₹549 crore), Sikkim ( ₹551 crore), Mizoram ( ₹711 crore), and Nagaland ( ₹809 crore). Tax devolution, a crucial revenue stream for states, involves the Centre allocating 41% of tax collection to states, according to the Finance Commission's recommendations.
The funds are used for priority sector projects and developmental schemes. The central government usually distributes tax devolution funds in 14 annual installments, comprising monthly payments, besides three additional disbursements in March. The 15th Finance Commission, under the chairmanship of NK Singh, had recommended tax devolution ratio of 42%, which was brought down to 41% after Jammu and Kashmir was carved out as a union territory in 2019.
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