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The Centre said it had released ₹72,961.21 crore as tax devolution to States. .Earlier, an instalment of ₹ 72,961.21 crore was released on December 11, 2023. This is in addition to the tax devolution which is due to the States on January 10, 2024.
“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,” an official release from Finance Ministry said.
Break-up
Of this latest ₹72,961.21 crore installment disbursed, the largest share has gone to Uttar Pradesh at ₹13,088.51 crore, followed by Bihar at ₹7,338.44 crore; Madhya Pradesh at ₹5,727.44 crore; West Bengal at ₹5,488.88 crore; Maharashtra at ₹4,608.96 crore; Rajasthan at ₹4,396.64 crore and Odisha at ₹3303.69 crore. The remaining States’ share has been lower than ₹3,000 crore and ranged from ₹281.63 crore (Goa) — ₹2,976.10 crore (Tamil Nadu).
Currently, tax devolution is being administered by the recommendations of the erstwhile 15th Finance Commission chaired by N.K.Singh.
The Finance Commission 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.
16th Finance Commission
The Union Cabinet had 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 Centre is expected to soon name the chairperson and members of the 16th Finance Commission.
The 16th Finance 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 16th Finance Commission would review the present arrangements for financing disaster management initiatives with reference to the funds constituted under the Disaster Management Act, 2005.
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