Centre Releases Additional Tax Devolution Instalment of ₹1.09 Lakh Crore to States
The Union Finance Ministry released an additional instalment of tax devolution of ₹1,09,019 crore to state governments on 31 October 2026, ahead of the festive season.
This money is on top of the regular monthly devolution. It is the second additional instalment of 2026-27; the first, of the same amount, was released on 1 August 2026.
The Finance Ministry said the advance release will help states speed up capital spending (spending on long-lasting assets like roads and buildings) and fund development and welfare work. It linked the release to stronger economic activity and buoyant (fast-growing) tax collections.
Uttar Pradesh got the largest share (₹19,208 crore), followed by Bihar (₹10,845 crore), Madhya Pradesh (₹8,010 crore), West Bengal (₹7,866 crore), Maharashtra (₹7,022 crore) and Rajasthan (₹6,460 crore).
Under the 16th Finance Commission framework, states are entitled to 41% of the divisible pool of central taxes, normally released in 14 instalments a year. The Union Budget 2026-27 estimates total tax devolution at ₹15.26 lakh crore, up from ₹13.93 lakh crore in the revised estimates for 2025-26.
Finance Commission (Article 280)
The Finance Commission is a body set up by the President of India every five years under Article 280 of the Constitution. Its main job is to recommend how the money the Centre collects through taxes should be shared between the Centre and the states (vertical devolution), and then among the states (horizontal devolution). It also recommends grants to states that need extra help. Its advice is not legally binding, but the Centre usually accepts the main tax-sharing formula.
The ₹1.09 lakh crore instalment is split among states using the 16th Finance Commission's formula. That is why Uttar Pradesh gets about ₹19,208 crore while a smaller state like Kerala gets about ₹2,597 crore.
Article 270 and the Divisible Pool
The divisible pool is the part of the Centre's tax money that must be shared with the states. The Centre collects big taxes like income tax, corporation tax and Central GST, but Article 270 of the Constitution says these are to be divided between the Centre and the states. Before dividing, some items are kept out: cesses, surcharges and the cost of collecting the taxes. What remains is the divisible pool.
The ₹1,09,019 crore comes out of the 41% share of the divisible pool owed to states for 2026-27. Releasing it early does not raise the states' total entitlement; it gives them the money sooner so they can spend on projects during the busy second half of the year.
- Additional instalment: ₹1,09,019 crore, released 31 October 2026
- Second additional instalment of 2026-27; first (₹1,09,019 crore) on 1 August 2026
- Top recipients: Uttar Pradesh ₹19,208 crore, Bihar ₹10,845 crore, Madhya Pradesh ₹8,010 crore, West Bengal ₹7,866 crore, Maharashtra ₹7,022 crore, Rajasthan ₹6,460 crore
- Others: Odisha ₹4,819 crore, Andhra Pradesh ₹4,597 crore, Karnataka ₹4,504 crore, Tamil Nadu ₹4,466 crore, Gujarat ₹4,094 crore, Jharkhand ₹3,660 crore, Chhattisgarh ₹3,602 crore, Assam ₹3,552 crore, Kerala ₹2,597 crore, Telangana ₹2,370 crore
- States' share of divisible pool: 41% (16th Finance Commission, 2026-31)
- Devolution normally paid in 14 instalments a year
- Budget 2026-27 estimate of tax devolution: ₹15.26 lakh crore (2025-26 revised estimate: ₹13.93 lakh crore)
- Constitutional basis: Article 270 (sharing of central taxes), Article 280 (Finance Commission)