States Receive Tax Devolution Instalments Worth Rs 1.16 Lakh Crore In November


India has released two instalments of tax devolution to states to help them meet their expenses.

The central government released Rs 1,16,665 crore on Nov. 10 as against the regular monthly devolution amount of Rs 58,333 crore, according to a statement released by the Ministry of Finance. This is in line with “the commitment of Government of India to strengthen the hands of states to accelerate their capital and developmental expenditure”, the ministry said.

Devolution refers to a portion of net proceeds from the central taxes and duties awarded to states.

The 15th Finance Commission mandated that 41% of the central government’s tax mop-up be shared with states between FY22 to FY26. The formula for devolution and the quantum of taxes for each state is also decided by the commission.

The states had received doubled tax devolution instalments worth Rs 1.16 lakh crore in August as well.

Similarly, in November last year as well, the central government had doubled the devolution to states to afford more liquidity to the states, so that they could better plan their infrastructure projects.

The central government’s gross tax collections have shown healthy growth and is expected to surpass the full-year budgeted target despite custom and excise duty cuts.

Central tax devolution is likely to rise to Rs 9.3 lakh crore in FY23, from Rs 8.8 lakh crore in FY22, and from Rs 8.2 lakh crore estimated in the FY23 budget, according to an ICRA report released in May.


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