Centre transfers ₹1.09 lakh crore tax share to states

The Centre on Saturday disbursed the additional tax devolution to state governments totalling over ₹1.09 lakh crore, supplementing the regular monthly allocations under the tax-sharing mechanism, according to the finance ministry.

This marks the second supplementary instalment released during the current financial year. The Union government transfers 41 per cent of centrally collected taxes to states across 14 instalments throughout the fiscal year. The latest release comes as states approach the festive season, when consumer spending and economic activity typically accelerate.

The finance ministry cited two primary rationales for the advance transfer. The funds are intended to enable state governments to expedite capital spending on infrastructure projects while simultaneously financing their development and welfare-related programmes. State administrators have long sought enhanced liquidity during peak spending periods to maximise the impact of public investment.

State governments depend substantially on tax devolution from the Centre, which comprises a significant portion of their revenue resources. Such supplementary transfers outside the regular monthly schedule provide states with additional fiscal flexibility to address seasonal demands and accelerate planned expenditure.