Telangana gets tax share of Rs. 982 crore from Centre

The release of Rs 982 crore to Telangana on Monday towards April’s Central tax devolution has surprised the State government as the Centre had slashed the instalment by 17.81 per cent.

Telangana was expecting to get Rs 1,195 crore this month, but the Centre unexpectedly reduced the tax devolution without taking the State into confidence. Further, the repeated requests of Chief Minister K Chandrashekhar Rao for giving exemptions and raising FRBM (Fiscal Responsibility and Budget Management) limits have not been considered by the Centre, which, instead, imposed a cut in the funds due to the State.

Interestingly, the current quantum of the Central tax devolution was slashed by 17.81 per cent for all States in the country, despite the Centre being fully aware that the State governments are unable to mop up



the revenues due to the lockdown announced to contain the coronavirus spread. The Union Finance Ministry issued sanctions for April instalment of the Central tax devolution amounting to Rs 46,038.10 crore on Monday. The tax devolution is done in 14 instalments during a year, and the Centre was due to pay three instalments up to the month of March payable in April where Telangana was expected to receive Rs 1,195 crore.

The tax devolution is done as per the recommendations of the 15th Finance Commission, which suggested that the 41 per cent of the divisible pool be devolved to the States in the vertical devolution formula. The Commission fixed the formula based on different parameters, including Income Distance, 2011 Census, Area, Forest and Ecology, Demographic Performance and Tax Effort.