Budget 2024-25: Respite for Karnataka with rise in tax devolution

Bengaluru: The union government will devolve Rs 44,485.49 crore to Karnataka as the State’s share in taxes and duties for the 2024-25 fiscal, providing some respite for the Siddaramaiah administration that had anticipated a lesser amount.

The finance department had projected that Karnataka could receive Rs 41,483 crore under devolution in 2024-25.

When contacted, Additional Chief Secretary (Finance) LK Atheeq told DH: “We welcome this and are happy about it.”

The “slightly higher devolution” will come in handy for Chief Minister Siddaramaiah who will present his record 15th Budget on February 16 amid pressure to set aside an estimated Rs 55,000 crore for the Congress’ five guarantees.

According to documents linked to Finance Minister Nirmala Sitharaman’s Interim Budget, the union government will devolve a total of Rs 12.19 lakh crore of taxes and duties to states. In this, Karnataka’s share is 3.647% as fixed by the 15th Finance Commission.

Karnataka’s projected devolution figure of Rs 44,485.49 crore includes corporation tax (Rs 13,969.93 crore), income tax (Rs15,393.23 crore), central GST (Rs 13,600.47 crore), customs (Rs 907.75 crore), union excise duty (Rs 542.78 crore), service tax (Rs 1.50 crore) and other taxes and duties (Rs 70.28 crore).

For the fiscal ending this March, Karnataka is now expected to get Rs 40,280.88 crore under devolution. This is more than Rs 37,252 crore that was estimated.

“We had assumed that there would not be much difference between the budget estimates (BE) and revised estimates (RE) for the current financial year. However, revenues of the union government grew more than their estimates,” a senior finance department official explained.

Uttar Pradesh, whose share in taxes and duties is the highest at 17.939%, will get Rs 2.18 lakh crore under devolution in the next fiscal. Bihar, with a 10% share, will get Rs 1.22 lakh crore.

With the union government constituting the 16th Finance Commission, the Congress-ruled Karnataka has been raising “injustice” in devolution.

Karnataka’s share in tax devolution fell from 4.713% under the 14th Finance Commission to 3.647% under the 15th Finance Commission.

“Karnataka has faced injustice in devolution of taxes. The state government collects Rs 4 lakh crore in taxes. We’re number two in India after Maharashtra. But when it comes to devolution, we're placed 10th,” Siddaramaiah said while reacting to the Interim Budget.