Finance Ministry releases Rs 46,038 crore as states share in taxes for April

New Delhi: The central government on Monday (April 20) released the April instalment of states’ share in central taxes amounting to over Rs 46,000 crore. The move is seen as an attempt to assist states effectively address situation arising out of coronavirus COVID-19, 

The money has been released ahead of schedule and as a special dispensation to meet immediate funding needs of the state governments looking to restore economic activity and minimise losses to its citizens due to disruptions caused by lockdowns.

“Ministry of Finance has issued sanctions for April instalment of Devolution of States` Share in Central Taxes and Duties amounting to Rs 46,038.10 cr today.,” the Finance Ministry said in a tweet. “The inter-se share is as per the recommendations of the XV Finance Commission,” it added.

The Budget had projected the share of the states in taxes at Rs 7.84 lakh crore for 2020-21.

The highest share of central taxes for April has gone to Uttar Pradesh with a net transfer of Rs 8,255.19 crore. This is followed by Bihar at Rs 4,631.96 crore. West Bengal has got Rs 3,461.65 crore while Madhaya Pradesh has got Rs 3,630.60.

Maharashtra share has been lower at Rs 2,824.47 crore. Goa and Sikkim have got the least from central pool of taxes at Rs 177.72 crore and Rs 178.64 crore respectively.

In its interim report for FY21, the 15th Finance Commission has reduced the share of states in the divisible pool of central taxes by one percentage point to 41 per cent, factoring in the conversion of the erstwhile state of Jammu and Kashmir into two Union territories.

The report, tabled in Parliament in February, has also changed the criteria and weights under which funds are allocated to states. It assigned 15 per cent weight to the population of a state, down from the 17.5 per cent allocated by the 14th Finance Commission, but raised the weight under demographic performance from 10 per cent to 12.5 per cent.

The 14th Finance Commission had recommended the states be given 42 per cent share in taxes.

The FFC report has also introduced “tax effect”, for states, with 2.5 per cent weightage, while significantly reducing the weight for income distance from 50 per cent to 45 per cent.

(With PTI inputs)