FinMin Releases Rs 95,082 cr to States as Tax Devolution

The finance ministry on Thursday released Rs 95,082 crore to states, which includes an advance instalment of tax devolution of Rs 47,541 crore, almost double of their entitlement for the month of January.

“With the release of the second advance instalment today, the states would have received an additional amount of Rs 90,082 crore under tax devolution over and above what has been budgeted to be released till January 2022,” the finance ministry said in a statement.

The ministry said this will’ help in strengthening the fiscal space of states and help them to accelerate their capital and development expenditure to fight the Covid-19 pandemic and to spur economic growth.

Beside this, the ministry said that by October 31,2021, the Centre had already released back-to-back loan amounting to Rs 1.59 lakh crore to state governments in lieu of GST compensation shortfall in 2021-22.

The amount released on Thursday is the second advance instalment of tax devolution to states. The Centre had released the first advance instalment of Rs 47,541 crore on November 22,2021.

In a pre-budget meeting of state finance ministers held on December 30, the Centre had asked the states to increase the capital expenditure to help revive the economy. In the meeting, many states including Tamil Nadu, Bihar and Maharashtra had sought immediate released of pending dues, including in some of the flagship programmers such as the Pradhan Mantri Gram Sadak Yojana (PMGSY) and MGNREGS.

The extra payment released on Thursday will help the states to pay pending dues and to increase allocation for spending on health and infrastructure projects.

Currently, 41% of the tax collected is devolved in 14 instalments among states during a fiscal. The increased amount of devolution in November is an advance release, and final adjustments will be made in March 2022. S-ET

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