Centre releases Rs 1.09 lakh crore in tax devolution to states ahead of Diwali

The Centre on Thursday released Rs 1,09,019 crore in tax devolution to state governments, advancing the regular November instalment by five days ahead of Diwali to help states accelerate capital spending and finance development and welfare-related expenditure.

The monthly instalment, normally scheduled for November 10, was released on November 5 in view of the upcoming festive season, the Union Finance Ministry said in a statement.

The release came just five days after the Centre transferred an additional Rs 1,09,019 crore to states on October 31, taking the total tax devolution released during the period to Rs 2,18,038 crore.

The October 31 transfer was an additional instalment over and above the regular monthly allocation, while Thursday's release represented an advance payment of the scheduled November instalment.

The Finance Ministry said the decision was intended to provide states with timely resources for infrastructure projects, developmental activities and welfare programmes during the festive period.

𝗨𝘁𝘁𝗮𝗿 𝗣𝗿𝗮𝗱𝗲𝘀𝗵 𝗴𝗼𝘁 𝗹𝗮𝗿𝗴𝗲𝘀𝘁 𝘀𝗵𝗮𝗿𝗲

According to the state-wise allocation, Uttar Pradesh received the highest amount of Rs 19,208 crore, followed by Bihar at Rs 10,845 crore and Madhya Pradesh at Rs 8,010 crore.

West Bengal received Rs 7,866 crore, Maharashtra Rs 7,022 crore and Rajasthan Rs 6,460 crore.

Among other major states, Odisha received Rs 4,819 crore, Andhra Pradesh Rs 4,597 crore, Karnataka Rs 4,504 crore and Tamil Nadu Rs 4,466 crore.

Gujarat was allocated Rs 4,094 crore, while Jharkhand received Rs 3,660 crore, Chhattisgarh Rs 3,602 crore and Assam Rs 3,552 crore.

Kerala received Rs 2,597 crore, Telangana Rs 2,370 crore and Punjab Rs 2,176 crore.

The allocation was made under the established tax-sharing arrangement between the Centre and state governments.

𝗦𝗲𝗰𝗼𝗻𝗱 𝘁𝗿𝗮𝗻𝘀𝗳𝗲𝗿 𝗶𝗻 𝗳𝗶𝘃𝗲 𝗱𝗮𝘆𝘀

The latest release followed an additional tax devolution instalment of Rs 1.09 lakh crore on October 31, which the Centre had announced to support states' spending requirements ahead of the festive season.

That payment was the second additional instalment released during the current financial year, 2026-27.

Earlier, on August 1, the Centre had transferred another additional instalment of Rs 1,09,019 crore to states to support capital and developmental expenditure.

With Thursday's release, states received two substantial transfers within five days, providing additional liquidity for expenditure commitments.

The government maintained that the timing of the transfers was intended to enable states to undertake planned expenditure without waiting for the normal monthly release schedule.

𝗛𝗼𝘄 𝘁𝗮𝘅 𝗱𝗲𝘃𝗼𝗹𝘂𝘁𝗶𝗼𝗻 𝘄𝗼𝗿𝗸𝘀

Tax devolution refers to the distribution of a constitutionally determined share of the Centre's divisible tax revenues among state governments.

Under the prevailing arrangement, 41 per cent of the divisible pool of central taxes is transferred to states, with allocations determined according to the applicable Finance Commission framework.

These transfers form an important component of states' revenue receipts and help finance infrastructure, healthcare, education, welfare programmes and other public expenditure.

Unlike funds tied to specific centrally sponsored schemes, tax devolution provides states with greater flexibility in determining their spending priorities.

The Centre generally releases the states' share in 14 instalments during a financial year, although it can advance scheduled transfers or release additional instalments depending on fiscal requirements.

𝗙𝗶𝘀𝗰𝗮𝗹 𝗱𝗲𝗳𝗶𝗰𝗶𝘁 𝗮𝘁 𝗥𝘀 𝟳.𝟭𝟰 𝗹𝗮𝗸𝗵 𝗰𝗿𝗼𝗿𝗲

The transfers came as the Centre's fiscal deficit stood at Rs 7.14 lakh crore during April-September 2026, accounting for 42.1 per cent of the full-year Budget estimate.

The Union government had budgeted a fiscal deficit of Rs 16.96 lakh crore for 2026-27.

Revenue receipts during the first six months stood at Rs 17.57 lakh crore, or 49.7 per cent of the Budget estimate.

Of these receipts, net tax revenue accounted for Rs 12.76 lakh crore, while non-tax revenue stood at Rs 4.81 lakh crore.

The advance release of tax devolution was expected to help state governments manage their expenditure schedules during the festive period while supporting ongoing development and welfare commitments.