Divisible Pool
Article 270 and the Cesses/Surcharges Exclusion (Article 271)
The divisible pool consists of all central taxes and duties — except those specifically assigned to states — and is the base from which states receive their constitutionally guaranteed share. Article 270 provides for distribution of all taxes and duties in the Consolidated Fund of India between the Union and States. However, Article 271 explicitly permits Parliament to levy surcharges on existing taxes, and the proceeds go entirely to the Union government — they are not included in the divisible pool. Cesses (levied for a specific purpose like road cess, education cess, health cess, etc.) similarly flow to designated funds outside the divisible pool. This constitutional design allows the Union to expand its non-shareable revenue through cesses and surcharges.
- Article 270: Distribution of taxes and duties between Union and States (the divisible pool mechanism)
- Article 271: Parliament may levy surcharges on any taxes; proceeds go entirely to Union (not in divisible pool)
- Cesses also excluded from divisible pool; directed to specified funds (e.g., PMGSY Fund, Education Cess)
- Divisible pool as % of gross central taxes: 89.2% (13th FC) → 82.1% (14th FC) → 78.3% (15th FC) → ~81% (FY 2025-26)
- Cesses and surcharges FY 2025-26: projected Rs. 4.23 lakh crore (entirely retained by Union)
- 18 states demanded raising vertical devolution from 41% to 50% — 16th FC did not accept
● Tracked since March 11, 2026 · last seen August 08, 2026 · updates as the daily brief publishes