The Central government today released Rs 559.61 crore to Meghalaya as an additional installment of tax devolution in view of the forthcoming festivities and the New Year.
According to the Finance Ministry, 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 Rs 72,961.21 crore to 28 states to strengthen the hands of state governments for financing various social welfare measures and infrastructure development schemes.
This installment is in addition to the tax devolution installment due to states on January 10, 2024 and the installment of Rs 72,961.21 crore already released on December 11, 2023.
Tax devolution refers to the distribution of tax revenues between the central government and the state governments. It is a constitutional mechanism established to allocate the proceeds of certain taxes among the Union government and the states in a fair and equitable manner.
Tax devolution is decided by the 15th Finance Commission constituted under Article 280 (3) of the Constitution. The commission makes recommendations regarding the distribution of net proceeds of taxes between the Centre and the states.
The recommendations made by the Finance Commission will apply to the five years from 2021-2022 through 2025-2026.
The 15th Finance Commission has decided that states will receive 41 per cent from the divisible tax pool for 2021-22 to 2025-26. This means that states will receive 41 per cent of the Gross Tax Revenue.
The devolution of taxes to states is usually done via monthly installments.
Money released under tax devolution is untied fund and hence states are free to spend the money as per their discretion.
