Centre advances ₹1.09 trillion tax devolution to states for November | Economy & Policy News

The Centre on Thursday released ₹1.09 trillion to states as tax devolution for November, advancing the monthly instalment by five days to enable them to accelerate capital spending and meet development- and welfare-related expenditure ahead of the festive season, the finance ministry said.

“The monthly instalment, normally released on November 10, has been advanced and released on November 5, 2026, in view of the festive season,” the ministry said in a press release.

The Centre had also released an additional instalment of tax devolution to states in October to support spending during the festive season. It generally transfers states’ share in central taxes through monthly instalments, while occasionally releasing two instalments in a month. Before the latest advance release, two instalments had also been released in August.

The Centre’s cumulative tax devolution to states in the first half of financial year 2026-27 (H1FY27) stood at nearly ₹7 trillion, according to the latest data available with the Controller General of Accounts (CGA). Under the Sixteenth Finance Commission’s recommendations, the Centre is required to share 41 per cent of the divisible pool of central taxes with states.

For the full financial year, the government has estimated states’ share in central taxes at ₹15.26 trillion in the Budget for FY27. The Centre had last year transferred ₹13.93 trillion to states as share in taxes.

The share of each state in the divisible pool is determined by the horizontal devolution formula recommended by the Sixteenth Finance Commission, which takes into account parameters such as income distance, population, area, forest cover, demographic performance, and contribution to gross domestic product (GDP). The panel has assigned a 42.5 per cent weight to income distance, 17.5 per cent to population, and 10 per cent each to area, forest cover, demographic performance, and contribution to GDP.

The contribution to GDP parameter was introduced by the Sixteenth Finance Commission, aimed at rewarding economically productive states.

Under the formula, Uttar Pradesh received the largest share of Thursday’s release at ₹19,208 crore, followed by Bihar at ₹10,845 crore and Madhya Pradesh at ₹8,010 crore. West Bengal received ₹7,866 crore, while Maharashtra was allocated ₹7,022 crore.

Among other states, Rajasthan received ₹6,460 crore, Odisha ₹4,819 crore, Andhra Pradesh ₹4,597 crore, Karnataka ₹4,504 crore, and Tamil Nadu ₹4,466 crore.