Divisible Pool
What is Excluded
The divisible pool consists of the net proceeds of Union taxes referred to in Article 270, but it explicitly excludes cesses and surcharges levied by the Union, which are retained entirely by the Centre and are not shared with States under the Finance Commission's devolution formula. This is distinct from mechanisms like the GST Compensation Cess, which was a separate, earmarked levy under the GST (Compensation to States) Act, 2017, used to compensate States for revenue shortfalls after GST rollout rather than to fund general devolution.
- Because cesses and surcharges sit outside the divisible pool, States' effective share of gross Union tax revenue is consistently lower than the nominal 41% devolution rate applied only to the divisible pool
- The GST Compensation Cess was levied on select goods (tobacco, coal, aerated drinks, high-end automobiles) and routed into a dedicated GST Compensation Fund, guaranteeing States a 14% annual revenue growth rate for five years after GST's 2017 rollout — a fundamentally different, time-bound mechanism from the constitutionally mandated, formula-based devolution under Article 270
● Tracked since March 11, 2026 · last seen August 08, 2026 · updates as the daily brief publishes
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