Centre releases Rs 1.09 lakh crore tax devolution; Uttar Pradesh gets biggest share to accelerate development spending

The Centre said the move is meant to strengthen state finances and give governments more room to push capital expenditure, developmental works and public welfare spending at a time when project execution and infrastructure demand remain high.

According to the Finance Ministry, the release is “in addition to the normal monthly devolution to be released on August 10, 2026.” The ministry said, “This release is in line with the commitment of Government of India to strengthen the finances of States to accelerate their capital and developmental expenditure,” underscoring the Centre’s view that early transfers can help states avoid cash-flow pressures and speed up spending decisions.

Tax devolution is the constitutionally mandated sharing of the Centre’s divisible tax pool with states, based on the Finance Commission’s recommendations, and it remains one of the most important untied revenue sources for state governments. The Finance Ministry said such transfers support infrastructure, social welfare and other development programmes, while an advance release improves liquidity and reduces dependence on short-term borrowing.

👉 Union Government releases tax devolution of ₹1,09,019 crore to State Governments, as one advance instalment to accelerate their capital and developmental expenditure

Read more ➡️ https://t.co/9ZENjsLdnj pic.twitter.com/qE0JVF9jd9

— Ministry of Finance (@FinMinIndia) August 1, 2026

State-wise allocations

In the August 2026 state-wise distribution, Uttar Pradesh received the highest allocation at Rs 19,208 crore, followed by Bihar at Rs 10,845 crore, Madhya Pradesh at Rs 8,010 crore, West Bengal at Rs 7,866 crore and Maharashtra at Rs 7,022 crore.

Other major recipients included Rajasthan at Rs 6,460 crore, Odisha at Rs 4,819 crore, Andhra Pradesh at Rs 4,597 crore, Karnataka at Rs 4,504 crore, Tamil Nadu at Rs 4,466 crore, Gujarat at Rs 4,094 crore and Jharkhand at Rs 3,660 crore.

The remaining states also received meaningful shares in the advance transfer. Chhattisgarh was allotted Rs 3,602 crore, Assam Rs 3,552 crore, Kerala Rs 2,597 crore, Telangana Rs 2,370 crore and Punjab Rs 2,176 crore. Haryana received Rs 1,484 crore, Arunachal Pradesh Rs 1,476 crore and Uttarakhand Rs 1,244 crore.

UP CM thanks PM Modi, FM Sitharaman for Rs 19,208 cr

Uttar Pradesh Chief Minister Yogi Adityanath posted on X and said, “I express my heartfelt gratitude to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman for the advance release of Rs 19,208 crore in tax devolution to Uttar Pradesh. This timely support reflects the true spirit of cooperative federalism, strengthens the state’s fiscal capacity and will accelerate development projects, infrastructure creation and public welfare initiatives. Together, we remain committed to building a stronger, more prosperous and self-reliant Uttar Pradesh.”

Heartfelt gratitude to Hon. PM Shri @narendramodi Ji and Hon. Union Finance Minister Smt. @nsitharaman Ji for the advance release of ₹19,208 crore in tax devolution to Uttar Pradesh.

This timely support reflects the spirit of cooperative federalism, further strengthening the… https://t.co/F94xN1CMey

— Yogi Adityanath (@myogiadityanath) August 1, 2026

Smaller states and northeastern states too were covered in the devolution. Himachal Pradesh received Rs 996 crore, Tripura Rs 699 crore, Meghalaya Rs 688 crore, Manipur Rs 682 crore, Mizoram Rs 615 crore, Nagaland Rs 524 crore, Goa Rs 398 crore and Sikkim Rs 365 crore. Officials said the broad-based transfer reflects the federal distribution formula and ensures that even smaller states receive resources aligned with their development needs.

Arunachal Pradesh and Manipur welcome move

Arunachal Pradesh Chief Minister Pema Khandu said the Rs 1,476 crore advance devolution to his state would strengthen finances and help speed up capital projects, infrastructure development and public welfare initiatives. He thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, calling the release a reflection of “the spirit of cooperative federalism.” Khandu also said the allocation was particularly important for Arunachal Pradesh because of its strategic location, sparse population and difficult terrain.

“This timely release will strengthen the state’s finances, enabling faster implementation of capital projects, infrastructure development, and public welfare initiatives that directly benefit our people,” Khandu said in a post on X. He also noted that on a per capita basis, Arunachal Pradesh continues to receive one of the highest shares among Indian states, reflecting the Finance Commission’s recognition of its geographic and strategic constraints.

Manipur Chief Minister Y Khemchand Singh also welcomed the advance release of Rs 682 crore, saying it would accelerate the state’s progress and strengthen development initiatives. “This timely support will significantly strengthen our development initiatives and accelerate the state’s progress,” he said, thanking the Centre for its continued support.

Advance tax devolution gives states greater fiscal flexibility to fast-track development

The advance release gives state governments an early infusion of funds just before the regular monthly transfer, allowing them to keep projects moving without waiting for the August 10 instalment. With the Centre devolving 41 per cent of its tax collections in 14 instalments during the fiscal year, the move is designed to provide states with greater fiscal flexibility while reinforcing the Centre’s push for higher public investment and faster development delivery.