← 6 November 2026's Current Affairs · Economy GA Prelims ★★★★★ Mains ★★★☆☆
States receive 41% of divisible tax pool
Why in News?
States get 41% of the divisible pool in 14 instalments: the Finance Commission devolution formula GS3 tests
Advance tax devolution of ₹1.09 lakh crore; UP received the most.
Why it matters: asked in UPSC 2015; factual, Prelims-type
What you need to know
2 min read
The Centre devolves 41 per cent of the taxes it collects among States in 14 instalments a year.
Recently an advance instalment of about ₹1.09 lakh crore was released, with Uttar Pradesh getting the largest share.
Sources: Topper IAS editorial (PIB / The Hindu / Indian Express)
Key facts
Remember these
- States receive 41% of the divisible pool of Union taxes.
- Devolution is paid in 14 instalments a year.
- An advance instalment of about ₹1.09 lakh crore was released recently.
- Uttar Pradesh received the largest share.
- The 14th Finance Commission had recommended 42%; it was trimmed to 41% after the reorganisation of Jammu and Kashmir.
Prelims · Mains
How the exam will ask it
Prelims
- The divisible pool consists of Union tax revenue excluding cesses, surcharges and the cost of collection.
- Finance Commissions are constituted under Article 280 of the Constitution, and Article 270 provides for the sharing of taxes between the Centre and States.
- The share of States in the divisible pool is currently 41%, down from the 42% recommended by the 14th Finance Commission.
Mains
GS3 (Indian Economy) and GS2 (Federalism): vertical devolution via the Finance Commission under Article 280 and Article 270 addresses the Centre-State fiscal imbalance, yet the growing use of cesses and surcharges outside the divisible pool shrinks States' effective share. Way forward: limit cesses and surcharges, keep horizontal devolution criteria transparent and balanced between equity and efficiency, and keep instalments timely so States can plan spending.
PYQ connection
A question UPSC has already asked on this
With reference to the Fourteenth Finance Commission, which of the following statements is/are correct?
- It has increased the share of States in the central divisible pool from 32 percent to 42 percent.
- It has made recommendations concerning sector-specific grants.
Select the correct answer using the code given below.
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Show answer
Answer: A
Why this matters: today's issue is directly connected to a concept UPSC has already tested. Read the story with this question in mind.
Practise this PYQ →Quick recall
Answer before you reveal
As per the devolution formula currently followed, States collectively receive what share of the divisible pool of Union taxes?
- 32%
- 40%
- 41%
- 42%
Show answer
Answer: C — Correct: 41% — States get 41% of the divisible pool, paid in 14 instalments a year; this is one point below the 14th Finance Commission figure. • 32% — wrong: 32% was the share recommended by the 13th Finance Commission, long since replaced. • 40% — wrong: 40% is not the share recommended by any recent Finance Commission. • 42% — wrong: 42% was the 14th Finance Commission figure, later trimmed to 41% after the reorganisation of Jammu and Kashmir.
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