Centre releases Rs 72,960 crore to states as tax devolution

The Indian government on Friday said it had released Rs 72,960 crore to states as tax devolution for financing various social welfare measures and infrastructure development schemes.

The Finance Ministry said that this installment is in addition to the tax devolution installment due to the states on January 10, 2024 and the installment of Rs 72,961.21 crore which was already released on December 11, 2023.

"In view of the forthcoming festivities and the New Year, the Union Government has authorised the release of an additional installment of tax devolution amounting to ₹72,961.21 crore to strengthen the hands of State Governments for financing various social welfare measures and infrastructure development schemes," a statement from the government read.


The Union Cabinet, chaired by Prime Minister Narendra Modi, recently approved the Terms of Reference (ToR) of the 16th Finance Commission, which will make recommendations for the five-year period beginning April 1, 2026.

The government is expected to soon name the chairperson and members of the 16th Finance Commission.

The commission would submit its report for the five-year period (2026-27 to 2030-31) to the President by October 31, 2025.

Besides suggesting tax devolution between the Centre and states and revenue augmentation measures, the commission would review the present arrangements for financing disaster management initiatives with reference to the funds constituted under the Disaster Management Act, 2005.

Finance Commission is a constitutional body that gives suggestions on Centre-state financial relations.

The erstwhile 15th Finance Commission under N K Singh had recommended that states be given 41 per cent of the divisible tax pool of the Centre during the five-year period 2021-22 to 2025-26, which is at the same level as was recommended by the 14th Finance Commission.