New Delhi: The Central government on Monday, June 12, released the third installment of tax devolution to state governments, amounting to a total of Rs.1,18,280 crore, as per the statement by the finance ministry.
This distribution of funds exceeds the typical monthly devolution of Rs. 59,140 crore and demonstrates the government's commitment to assisting the states' financial needs.
The additional advance installment given to the states is intended to speed up and simplify capital expenditures, pay welfare and development-related costs, and guarantee the availability of funds for important projects and programmes.
"One advance installment is being released to states in addition to the regular installment due in June 2023 to enable them to accelerate capital spending, finance their development and welfare-related expenditures, and also to make resources available for priority projects/schemes," the statement said.
According to a predetermined formula that takes into consideration a number of variables, including population, area, and fiscal ability, the money have been distributed to the states. The sums received by each state are shown in the state-by-state division of the net revenues of union taxes and duties for June 2023.
The southern state of Andhra Pradesh earned Rs. 4,787 crore, while the northeastern state of Arunachal Pradesh received Rs. 2,078 crore. Gujarat received Rs. 4,114 crore, Assam Rs. 3,700 crore, Bihar Rs. 11,897 crore, and Chhattisgarh Rs. 4,030 crore, correspondingly.
About Tax Devolution: Tax devolution refers to the process of transferring the authority to levy and collect taxes from a central government to regional or local governments within a country. It involves granting greater fiscal autonomy to subnational governments, allowing them to raise revenue through taxation and have more control over their own finances.Tax devolution is typically implemented in countries with a federal or decentralized system of government, where power and responsibilities are shared between the central government and regional or local governments. By devolving tax powers, the central government aims to promote regional development, enhance local accountability, and provide a fairer distribution of fiscal resources.
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