Polity · GS2
Advance tax devolution to states
One line
The Union released ₹1,09,019 crore as an advance instalment of tax devolution to states.
Summary
Tax devolution is an unconditional share of divisible-pool taxes, not a discretionary scheme grant. An advance release can ease cash-flow pressure but does not change the constitutional sharing formula.
PYQ pattern
UPSC often tests the institution, legal basis, mechanism, and implementation limits behind this issue. Use the official UPSC question-paper archive.
Core notes
- Article 270 governs distribution of specified Union taxes between the Union and states.
- The Finance Commission recommends the vertical share and horizontal distribution criteria.
- Tax devolution differs from grants-in-aid and centrally sponsored scheme releases.
Prelims lens
- The divisible pool excludes cesses and surcharges earmarked for Union purposes.
- States can generally use devolved taxes according to their own budget priorities.
- Separate the announcement from measured outcomes.
MCQ 1
Consider the following statements:
- The divisible pool excludes cesses and surcharges earmarked for Union purposes.
- An advance instalment changes each state's constitutional share without a Finance Commission framework.
Which of the statements given above is/are correct?
- A. 1 only
- B. 2 only
- C. Both 1 and 2
- D. Neither 1 nor 2
Reveal answerHide answer
A
Statement 1 is correct. Statement 2 makes a broader claim that the law, institution, or evidence does not support.
MCQ 2
Tax devolution is based primarily on:
- A. Finance Commission recommendations
- B. Election Commission directions
- C. GST invoices alone
- D. Municipal bye-laws
Reveal answerHide answer
A
Finance Commission recommendations is the correct relationship for this topic.
Mains
Question, 10 marks, 150 words: Explain why predictable tax devolution matters for fiscal federalism.
Approach:
- Define the mechanism and its institutional setting.
- Explain the current significance.
- Examine implementation limits and distributional effects.
- Suggest specific safeguards and measurable outcomes.