‘Financial discrimination,’ Row over advance tax devolution to Karnataka as poll-bound Bihar gets a bigger share

Karnataka Ministers MB Patil and Priyank Kharge have criticised the Centre over the state’s low allocation in the October 2025 tax devolution – the share of Central Taxes and duties distributed to states. While Uttar Pradesh received the largest share, followed by poll-bound Bihar, and Madhya Pradesh, Patil called the allocation a case of “financial discrimination,” arguing that “since Karnataka contributes more, it must receive more”.

MB Patil demands ‘justice for Karnataka’

In a post on X (formerly Twitter), Patil demanded “financial fairness” and “justice for Karnataka”. “Karnataka deserves its fair share,” he wrote on X.

According to the state-wise allocation, Uttar Pradesh received the highest share at Rs 18,227 crore, followed by poll-bound Bihar with Rs 10,219 crore. Madhya Pradesh ranked third, securing Rs 7,976 crore.

In contrast, Karnataka received Rs 3,705 crore, while Goa got the smallest share at Rs 392 crore.

The minister, who is upset over the low advance tax devolution, further added, “This is financial discrimination against a state that fuels India’s GDP, innovation, and tax revenues. Karnataka contributes more – it must receive more.”

‘All southern states put together get less than UP’: Priyank Kharge

Karnataka Minister Priyank Kharge too voiced his concern over the low allocation of tax devolution. “BJP’s vote-bank states Uttar Pradesh and Bihar get Rs 18,000 cr and Rs 10,000 cr respectively, while Karnataka is left with a mere Rs 3,700 crore,” he wrote on X, before adding, “All five southern states put together get less than Uttar Pradesh.”

Kharge went on to claim that Karnataka alone contributed Rs 1.6 lakh crore in GST in FY 2024–25, and Rs 1.9–2.2 lakh crore in direct and corporate taxes. “Yet the Centre shortchanges us,” he expressed.

“For every Rs 100 Karnataka sends to Delhi, we get back Rs 12, while UP gets Rs 295 back & Bihar gets Rs 770 back,” he claimed. 

He further wrote, “We are the state that creates maximum jobs, absorbs the highest number of migrants, leads in IT/ITeS exports and powering the nation’s growth, yet we are being starved of funds by the Centre.”

State-wise allocation of tax devolution

The Ministry of Finance, on October 1, released Rs 1,01,603 crore to state governments as an advance instalment of tax devolution.

“In view of the upcoming festive season and to enable States to accelerate capital spending and finance their development/ welfare related expenditure, the Union Government has released an additional tax devolution of Rs 1,01,603 crore to State Governments on 1st October, 2025, in addition to the normal monthly devolution due to be released on 10th October 2025,” the release read.

This is not the only time that Uttar Pradesh, Bihar and Madhya Pradesh have received colossal tax devolution. In January this year, Uttar Pradesh received Rs 31,039.84 crore while all five Southern states combined got only about Rs 27,336 crore. At the time, Karnataka CM Siddaramaiah criticised BJP leaders from the state for not speaking out against the “injustice” meted out to Karnataka.