TG Gets a Rs.3,745 crore Tax Devolution Boost

Hyderabad: In a significant boost to the state finances ahead of the festive season, the Telangana government received a tax devolution of Rs.3,745 crore from the Centre on Thursday. The amount includes both the regular installment due for October and an advance instalment, as part of the Centre’s effort to support states’ fiscal needs during the festive period.

Across the country, the union ministry of finance released Rs.1,78,173 crore overall to all states, which is double the normal monthly devolution of Rs.89,086.50 crore. This included one advance instalment in addition to the regular one for October.

A statement issued by the ministry of finance said, “This release is in view of the upcoming festive season and to enable states to accelerate capital spending, and also finance their development and welfare-related expenditure.”

Andhra Pradesh received Rs.7,211 crore, while Uttar Pradesh secured the highest allocation with over Rs.31,000 crore. Other major beneficiaries included Madhya Pradesh with Rs.13,987 crore and West Bengal with Rs.13,404 crore.

By normal practice, money from the divisible tax pool is devolved to states in 14 installments per year — 11 over 11 months and an additional three provided in March.

For the fiscal year 2024-25, the government is projected to devolve 32.5 per cent of central taxes to states, lower than the 41 per cent recommended by the 15th Finance Commission.

This lower share is attributed to the imposition of cess and surcharges by the Centre, which is not shared with the states. States have often raised concerns about receiving less devolution than what is recommended by the Finance Commission.

While the provisional estimates for FY24 indicated a 32.6 per cent share of central taxes for states, the Union Budget for FY25 projects an increase in the total amount devolved from ₹11.3 lakh crore in FY24 to ₹12.5 lakh crore in FY25.

This timely release by the Centre aims to provide financial stability to states and help them meet their development and welfare commitments during the festive season.