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Tuesday, Dec 26, 2023
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States get second tax devolution instalment in Dec

The instalment is in addition to the usual monthly devolution instalment of Rs 72,961.21 made earlier on December 11 and also in addition to the tax devolution instalment due to states on January 10, 2024.

The Centre Friday released an extra instalment of tax devolution of Rs 72,961.21 crore to 28 states in December citing forthcoming festivities and the New Year. This is the second extra instalment after the first additional instalment was made in June to ease the funding flow for states.

The instalment is in addition to the usual monthly devolution instalment of Rs 72,961.21 made earlier on December 11 and also in addition to the tax devolution instalment due to states on January 10, 2024. With this instalment, the Centre has transferred Rs 1.46 lakh crore to states in December.

As per the norm, tax devolution is made through 14 instalments to states in a year, with at least one instalment in each month and two extra instalments released in the last two months of the year. Since 2022-23, the Centre has been frontloading the two extra instalments in the first nine months of the year to boost states’ funds for expenditure, especially for capex.

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“In view of the forthcoming festivities and the New Year, the Union Government has authorised the release of an additional instalment of tax devolution amounting to Rs 72,961.21 crore to strengthen the hands of State Governments for financing various social welfare measures and infrastructure development schemes,” the Finance Ministry said in a statement.

Among the 28 states, Uttar Pradesh got the highest share with tax devolution instalment of Rs 13,088 crore, followed by Bihar at Rs 7,338 crore and West Bengal at Rs 5,488 crore.

Festive offer

Officials said the total amount of devolution every month is according to the budget estimate, with the amount and frequency varying every year. Till the revised estimates for a financial year come at the time of presentation of next year’s budget, the tax devolution amount is governed by the budget estimate, they said.

With the two extra instalments by December, the Centre’s tax devolution has reached Rs 7.47 lakh crore or 73 per cent of its FY24 budget estimate of Rs 10.21 lakh crore compared with 63 per cent in the year-ago period. Now, Rs 2.74 lakh crore remains to be transferred to states in the remaining three months of this fiscal.

First published on: 23-12-2023 at 00:17 IST
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