Union Budget 2025| Devolution: Karnataka to get Rs 51k cr, lower than Tamil Nadu and Andhra

Bengaluru: The Union government will devolve Rs 51,876 crore to Karnataka as its share in taxes and duties for the 2025-26 fiscal, providing some respite for India’s second-highest tax-paying state.

Tamil Nadu is set to receive Rs 58,021.50 crore under devolution, the highest among the southern states. Andhra Pradesh comes second with 57,566.31 crore.

Karnataka’s devolution figure will be a 10 per cent increase from Rs 46,932.72 crore the state would get for the financial year ending 2024-25.

This ‘slight’ increase in devolution will come in handy for Chief Minister Siddaramaiah ahead of the 2025-26 state budget, his record 16th outing as the finance minister, which he is scheduled to present next month.

According to sources in the finance department, the government was expecting around Rs 46,300 crore under devolution.

Documents linked to Finance Minister Nirmala Sitharaman’s 2025-26 Union Budget show that the union government will devolve a total of Rs 14.22 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 51,876 crore includes corporation tax (Rs 14,485.70 crore), income tax (Rs 19,328.16 crore), central GST (Rs 15,102.59 crore), customs (Rs 2,387.77 crore), union excise duty (Rs 496.06 crore), service tax (Rs 1.50 crore) and other taxes and duties (Rs 74.76 crore).

Uttar Pradesh, whose share in taxes and duties is the highest at 17.939%, will get Rs 2.55 lakh crore under devolution in the next fiscal. Bihar, with a 10% share, will get Rs 1.43 lakh crore.

The 14th Finance Commission gave Karnataka a share of 4.71% in the divisible pool of taxes. The state’s share came down to 3.64% under the 15th Finance Commission.

In 2015-16, the state's share in taxes was Rs 24,789.78 crore. This rose to Rs 39,806.26 crore in 2019-20. That's a compounded annual growth rate (CAGR) of nearly 10%. At the same CAGR, Karnataka’s share in taxes for 2025-26 should have been Rs 70,000 crore.

Track Budget reactions LIVE

Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.