NEW DELHI: Jammu and Kashmir has ceased to receive its share of central tax devolution directly following its reorganisation as a Union Territory in 2019. Previously, the erstwhile state had an inter-se share of 1.854 per cent in central tax devolution as per the Fourteenth Finance Commission (2015-2020). However, after the abrogation of Article 370 and its conversion into a Union Territory, it was removed from the list of states receiving direct devolution. Instead, the funds are now disbursed as grants by the Ministry of Home Affairs.
The last recorded devolution to Jammu and Kashmir was in the financial year 2019-20, amounting to Rs 6,801.81 crore. Since then, no direct share of Union taxes has been allocated to the region under the divisible pool. In contrast, states continue to receive their respective shares, with Uttar Pradesh being the highest recipient, receiving Rs 2,02,619.69 crore in 2023-24. The total tax devolution to all states in the same year stood at Rs 11,29,493.71 crore.
The Finance Commission determines the criteria for tax devolution based on factors such as population, income distance, area, forest cover, and fiscal performance. While other states saw adjustments in their percentage shares over time, Jammu and Kashmir’s removal from the devolution list reflects its altered administrative status. The new mechanism means that the region’s financial assistance is routed through the Union budget as discretionary grants rather than a constitutionally mandated share of central taxes.
The shift raises concerns about financial autonomy, as the funds now depend on annual allocations by the central government rather than a fixed percentage of national tax revenues. Meanwhile, the government maintains that the transition allows for better oversight and targeted development funding in Jammu and Kashmir.
