J&K, Ladakh to get Rs 460 cr share from central taxes

Finance Ministry has accorded sanction to the release of Rs 460 crore to the UTs of J&K and Ladakh as ‘May installment of devolution of share in central taxes and duties as per the recommendation of 15th Finance Commission’.

J&K and Ladakh are the only two union territories in the country which will continue to get 1 percent of devolution from central pool of taxes and duties as per the recommendations made by the 15th Finance Commission after J&K was moved out from the state list.

A senior finance department official informed that union finance ministry has sanctioned a total of Rs 46,038 crore as May installment of devolution of states’ share in central taxes and duties. “Of which J&K’s and Ladakh’s share is 1 percent which is estimated Rs 460 crore. The division of funds between two UTs will be done on the basis of existing mechanism in place which has so far helped the administration in distribution of assets of the erstwhile state of J&K between two newly created UTs.”

The NK Singh-led 15th Finance Commission has recommended 41% share for states from Centre’s divisible pool in 2020-21, while making a special provision of 1% for the new union territories of Jammu & Kashmir and Ladakh.

The commission has notionally estimated the share of the erstwhile state of Jammu and Kashmir to be around 0.85 percent of the divisible pool. “We believe that there is a strong case for enhancing this to 1% of the divisible pool in order to meet the security and other special needs of the UTs of J&K and Ladakh,” it said in its interim report. “Since this enhancement has to be met from the union government’s resources, we recommend that aggregate share of states may be reduced by 1 percentage point to 41% of the divisible pool.”

Union Ministry in a tweet has stated these releases, similar to April releases, have been calculated based on tax receipts projected in Budget 2020-21 & not as per actuals.

The Budget had projected the share of the states in taxes at Rs 7.84 lakh crore for 2020-21. The 15th Finance Commission had recommended the share of states at 41 per cent of the divisible pool and 1 per cent for the newly-created union territories of Jammu and Kashmir, and Ladakh.

The 14th Finance Commission had recommended the states be given 42 per cent share in taxes.

“Finance Ministry has issued sanction orders for Rs 46,038.70 cr for the May instalment of Devolution of States’ Share in Central Taxes & Duties,” the ministry said in another tweet. As per the state-wise break up of devolution, Rs 1,892.64 crore was issued to Andhra Pradesh, Rs 1,441.48 crore to Assam, Rs 1,564.4 crore to Gujarat, Rs 3,461.65 crore to West Bengal, Rs 8,255.19 crore to Uttar Pradesh, Rs 894.53 crore to Kerala and Rs 4,631.96 crore to Bihar.