This cumulative amount comprises the regular monthly devolution along with an additional instalment to accelerate development and capital spending in states.
- Interim Budget 2024-25 has a provision of Rs. 12,19,783 crore towards devolution of taxes to States.
Devolution of Taxes to States
- Article 270 of the Constitution provides for distribution of net tax proceeds collected by the Union government (corporation tax, personal income tax, central GST, etc.) between Union and states.
- This devolution is based on the recommendation of the Finance Commission (FC) constituted every five years as per Article 280.
- This divisible pool does not include cess and surcharge levied by the Centre.
Basis of Devolution
- Vertical Devolution: Share of states from divisible pool which presently stands at 41% based on the recommendations of the 15th FC.
- Horizontal Devolution: It refers to distribution among the states from the share allocated to states based on various criteria.
- As per 15th FC, the assigned criteria with their weights are: Income Distance (45%), Area (15%), Population, 2011 (15%), Demographic performance (12.5), Forest and Ecology (10%), and Tax and fiscal efforts (2.5%).
Grants to States
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