Centre oks Rs 1.42 lakh crore tax devolution to states

New Delhi: The Centre on Thursday approved the release of two installments of tax devolution amounting to ₹1.42 lakh crore to 28 states to bolster their ability to fund various social welfare and infrastructure development schemes.

This release is in addition to another instalment of Rs 71,061 crore already made on February 12, the finance ministry said in a statement.

Uttar Pradesh leads the pack of the beneficiary states. It will receive Rs 25,495 crore from the latest instalments, followed by Bihar (Rs 14,295 crore), Madhya Pradesh (Rs 11,157 crore), West Bengal (Rs 10,692 crore), Maharashtra (Rs 8,978 crore), Rajasthan (Rs 8,564 crore), Odisha (Rs 6,435 crore) and Tamil Nadu (Rs 5,797 crore).


Experts said that the latest devolution will help states maintain their pace of expenditure in the build-up to the general elections, expected in April-May.

Under the existing framework, 41% of taxes collected by the Centre is shared with states, usually in 14 instalments during a financial year.

These funds are earmarked to states based on a predefined formula decided by the Finance Commission that factors in criteria, including population, area, and fiscal capacity.