Central tax devolution: UP gets more than South states combined

The Union government has released tax devolution of Rs 1,78,173 crore to states in October, with Uttar Pradesh being the top beneficiary. Unsurprisingly, seven of the top 10 in the list are ruled by the BJP or its alliance partners.

Due to the upcoming festival season, October month’s tax devolution also includes one advance instalment of Rs 89,086.50 crore in addition to regular instalments.

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States get a normal monthly devolution of Rs 89,086.50 crore.

“Advance instalment released in view of upcoming festive season and to enable states to accelerate capital spending and finance their development/welfare-related expenditure,” the Union Finance Ministry said in a statement on Thursday (October 10).

Also read: Centre's actions have weakened cooperative federalism: Pinarayi Vijayan

Currently, 41 per cent of taxes collected by the Centre is devolved to states on regular instalments.

The map below shows the allocation to each state. Click on the state to know the amount it received.

Allegations of bias towards non-BJP states

With allegations by several Opposition-ruled states including Karnataka and Tamil Nadu over not getting more share in tax devolution, the latest state-wise distribution gives ammunition for the Congress to attack the BJP.

As per the Finance Ministry’s tax devolution distribution, Uttar Pradesh received Rs 31,962 crore advance instalment from the Union government, the largest share among all 28 states.

Also read: As 4 South states protest against Centre’s fiscal ‘unfairness’, know what the grouses are

Uttar Pradesh Chief Minister Yogi Adityanath expressed his gratitude to Prime Minister Narendra Modi for the financial support.

“Heartfelt gratitude to Hon. PM Shri @narendramodi Ji and @FinMinIndia for the timely release of Rs 31,962 crore to UP as part of tax devolution. This advance instalment will significantly boost our festive season preparations and accelerate development and welfare initiatives across the state. Together, we are building a stronger and more prosperous Uttar Pradesh,” Adityanath wrote on his X (formerly Twitter) account.

Bihar, which is ruled by JD (U), an ally of the BJP, was the second-highest beneficiary with Rs 17,921 crore followed by BJP-ruled Madhya Pradesh (Rs 13,987 crore), West Bengal (TMC – Rs 13,404 crore), Maharashtra (Mahayuti alliance including BJP – Rs 11,255 crore), Rajasthan (BJP – Rs 10,737 crore), Odisha (BJP – Rs 8,068 crore), Tamil Nadu (DMK – Rs 7,268 crore), Andhra Pradesh (TDP, ally of BJP – Rs 7,211 crore), and Karnataka (Congress – Rs 6,498 crore) in the top 10.

Only three Opposition-ruled states (West Bengal, Tamil Nadu, Karnataka) feature in the top 10.

The lowest tax devolution received among the states was Goa with Rs 688 crore. The north-eastern states of Meghalaya (Rs 1,367), Manipur (Rs 1,276), Tripura (Rs 1,261), Nagaland (Rs 1,014), Mizoram (Rs 891), and Sikkim (Rs 691) were among the seven states that received the least.

Congress questions Centre

Senior Congress leader and former MP BK Hariprasad questioned the Finance Ministry over the injustice to Karnataka and other South Indian states in tax devolution.

He said that Uttar Pradesh receiving Rs 31,962 crore was more than what entire South Indian states got – Rs 28,152 crore (Tamil Nadu – Rs 7,268 crore; Andhra Pradesh – Rs 7,211 crore; Karnataka – Rs 6,498 crore; Telangana – Rs 3,745 crore; Kerala – Rs 3,430 crore).

“Another instance of injustice to Karnataka & South India @FinMinIndia tax devolution gives UP ₹31962Cr, while entire South India gets ₹28152Cr Which is ₹3810Cr less than UP alone Is it fair for taxes & revenue generated by South, why @BJP4Karnataka leaders are silent on this (sic),” Hariprasad posted on his X handle.

Karnataka's claim

Last month, Karnataka Chief Minister Siddaramaiah wrote to eight chief ministers over “unfair devolution” of taxes by the Union government.

“States with higher GSDP per capita, like Karnataka and others, are being penalised for their economic performance, receiving disproportionately lower tax allocations. This unjust approach undermines the spirit of cooperative federalism and threatens the financial autonomy of progressive states,” Siddaramaiah wrote on his X handle with “OurTaxOurRight” hashtag and invited them to a conclave in Bengaluru to discuss the issue.

In February, Udhayanidhi Stalin, who was recently elevated as Deputy Chief Minister of Tamil Nadu, had demanded that the BJP regime at the Centre ensure “fair tax devolution” to the state.

He had said that during the past five years, though Tamil Nadu has contributed Rs 6 lakh crore by way of taxes to the Centre, only Rs 1.58 lakh crore was the tax devolution to the state. However, Uttar Pradesh was given approximately Rs 7 lakh crore while it remitted Rs 3.41 lakh crore in taxes to the Union government.