Union government released an additional
₹1,09,019 crore to state governments as tax devolution
¨
Union government released
an additional ₹1,09,019 crore to state governments as tax devolution on 1 August
2026.
¨
The transfer was made
before the regular monthly tax devolution scheduled for 10 August 2026.
¨
According to the Finance
Ministry, the early release was aimed at strengthening state finances and
supporting capital and developmental expenditure.
¨
Tax devolution refers to
the transfer of a share of the Union government’s net tax proceeds to states
under the Finance Commission framework.
¨
Under the current
arrangement, states receive 41% of the net tax proceeds collected by the Union
government.
¨
Tax devolution is a
constitutional mechanism that supports fiscal federalism in India.
¨
In the additional
instalment, Uttar Pradesh received ₹19,208 crore, which was the highest share
among all states.
¨
Bihar received ₹10,845
crore, while Madhya Pradesh received ₹8,010 crore.
¨
West Bengal received
₹7,866 crore, Maharashtra received ₹7,022 crore, and Rajasthan received ₹6,460
crore.
¨
The additional liquidity
support followed Goods and Services Tax (GST) collections of more than ₹2.11
lakh crore in July 2026.
¨
GST is an indirect tax
system implemented in India on 1 July 2017.
¨
Tax devolution and GST
collections are important components of India’s fiscal architecture.
¨
The Finance Commission
recommends the distribution of central taxes between the Union government and
the states.
¨
The current 41% tax
devolution share for states forms the basis of Centre-State revenue sharing.
¨
Tax devolution is
different from grants-in-aid, which are also part of financial transfers from
the Centre to states.
¨
The additional tax
transfer aims to improve state-level financial capacity and promote development
activities across the country.
