Centre Releases ₹1.09 Lakh Crore Advance Tax Devolution to States to Boost Development Spending

The Union government has released an advance tax devolution of ₹1,09,019 crore to state governments, providing them with additional financial resources ahead of the regular monthly transfer scheduled for August 10. The move is aimed at strengthening state finances and enabling faster execution of infrastructure and development projects.

According to the Finance Ministry, the advance release is separate from the routine monthly tax devolution and is intended to improve the fiscal capacity of states. By receiving funds earlier than usual, state governments can accelerate capital expenditure, support public infrastructure, and continue welfare and development initiatives without waiting for the regular release.

Among the beneficiaries, Uttar Pradesh received the highest allocation of ₹19,208 crore, followed by Bihar with ₹10,845 crore and Madhya Pradesh with ₹8,010 crore. Other major recipients include West Bengal, Maharashtra, Rajasthan, Odisha, Andhra Pradesh, Karnataka, and Tamil Nadu, reflecting the distribution formula recommended by the Finance Commission. Smaller states and Union Territories also received their respective shares under the allocation.

Tax devolution is a constitutional mechanism through which the Union government transfers a share of centrally collected taxes to states. These transfers provide states with untied funds that can be used according to their own priorities, including investments in roads, healthcare, education, irrigation, public services, and other development programmes. The allocation follows the recommendations of the Finance Commission, which determines the distribution based on various economic and demographic factors.

The advance transfer is expected to improve liquidity for state governments, allowing them to begin or expand projects without delays caused by funding constraints. It also supports states in maintaining momentum on capital-intensive initiatives that contribute to long-term economic growth and employment generation.

The Finance Ministry clarified that this advance instalment does not replace the regular monthly tax devolution. The scheduled transfer due on August 10 will be released separately as planned, ensuring that states continue to receive their normal share of central tax revenues in addition to the advance support already provided.