Centre transfers additional Rs 45,000 crore to states as FY21 tax devolution


The finance ministry released an additional Rs 45,000 crore to the states as part of the tax devolution for the recently concluded fiscal, according to an official statement on Thursday.

This took the total devolution to the states to Rs 5.95 lakh crore in FY21, an 8.2% increase over the figure in the revised estimate (RE) of the budget, at Rs 5.45 lakh crore, the ministry said.

The development came as the government’s Goods and Services Tax (GST) collections for March touched an all time high of nearly Rs 1.24 lakh crore.

“The healthy GST collections in the month of March 2021, along with the additional devolution of Rs. 45,000 crore to the state governments for the just-concluded fiscal, confirm our view that the tax revenues in FY2021 have exceeded the RE,” said Aditi Nayar, principal economist at ICRA.

The 15th Finance Commission had recommended that the Centre share 41% of the shareable pool of taxes collected with the states, along with 1% for the Union Territories of Jammu and Kashmir and Ladakh, for FY21.

“The Ministry of Finance has released these amounts to share the revenue buoyancy seen in Q4 2020-21 and in the true spirit of fiscal federalism,” the statement said.

The additional amount was provided to the states in two tranches, one of Rs 14,500 crore as part of the 14th regular instalment of devolution on March 26, and the remaining Rs 30,500 crore was transferred on Wednesday.

Uttar Pradesh received the highest additional amount of Rs 8,069 crore, taking the total devolution to the state for FY21 just over Rs 1 lakh crore as against Rs 98,618 crore in the RE.

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This was followed by an additional Rs 4,527 crore transferred to Bihar, making the total devolution received by the state Rs 59,861 crore in the last fiscal, over the budgeted Rs 55,334 crore.



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