Government Releases Rs 47,541 Crore To States As Second Advance Instalment Of Taxes Devolved
A similar amount was released to states in November.
The central government released Rs 95,082 crore as taxes devolved to states, including an advance instalment to help them meet expenditure.
The government released Rs 47,541 crore as the second advance instalment of tax devolution, according to a Finance Ministry statement. "This is in addition to the regular devolution amount (of Rs 47,451 crore) for the month of January 2022, also being released today (Thursday)."
The advance instalments are released to accelerate the states' capex and other developmental expenditure to “ameliorate the deleterious effects of Covid-19 pandemic”, the statement said.
The total devolution amount is calculated at 41% of the central taxes collected.
Usually, the regular devolution amount is disbursed to states in 14 instalments and any difference between the budget estimates will be adjusted in March via three instalments, Finance Secretary TV Somanathan had said in November 2021 when the first advance instalment of the tax devolution amount was released.
The first advance instalment was released on Nov. 22 along with the then monthly tax devolution amount. "With the release of the second advance installment 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 statement said.
A senior Karnataka government official explained that states were paid their share in taxes in 14, not 12, instalments in the fiscal year. And three of those were paid in March, leaving little time to spend, according to the official, who spoke anonymously.
The states had asked the central government if they could release two months' money somewhere in the middle and that's what they have done, the official said.
The advance instalment of the taxes devolved is part of the states' income. This is not something states are getting over and above the amount that was budgeted, the official said, but are just getting it ahead of time.
While the advance payment will help during the Pongal festival season, a senior Tamil Nadu government said the funds received are different from the other dues the central government owes states.
The official was referring to the GST compensation owed to states for years 2020-21 and 2021-22.
The economic impact of the pandemic led to higher GST compensation requirements when collections remained low, Union Minister of State for Finance Pankaj Chaudhary said in his response in Lok Sabha during the recently concluded winter session of parliament.
GST compensation of Rs 1,30,464 crore was released to states and union territories to partly meet the compensation payable between April 2020 and March 2021 as the GST Compensation Fund was inadequate then to meet the full requirement, he said.
Subsequently, Rs 1.1 lakh crore and Rs 1.59 lakh crore was release to states and union territories in FY21 and FY22 as back-to-back loans to meet the resource gap amid shortfall in GST compensation, he said.
"Taking into account the GST compensation released from Compensation Fund as well as back-to-back loans released in FY21 and FY22, GST compensation of Rs 37,134 crore for period April 2020 to March 2021 and Rs 14,664 crore for April-September 2021 is pending to States/ UTs as per provisional figures," Chaudhary said.