The Union Government has recently authorized the release of tax devolution to states, including an additional instalment beyond the regular allocation.
About Devolution of Taxes to States:
- Constitutional Basis: Article 270 of the Constitution mandates the distribution of the net proceeds of taxes collected by the Union government between the Union and the States.
- These taxes include corporation tax, personal income tax, Central GST, and Integrated Goods and Services Tax (IGST), but exclude cess and surcharges levied by the Centre.
- Role of Finance Commission: Article 280 of the Constitution mandates the constitution of the Finance Commission (FC) every 5 years to recommend how these taxes should be divided.
- Additional Support: States also receive grants-in-aid based on the recommendations of the Finance Commission.
Ref: Source
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