Comprises the net proceeds of all Union taxes and duties, specifically excluding cesses and surcharges.

The percentage share of states in this pool (vertical devolution) is determined by the President based on the recommendations of the Finance Commission (Article 280).

The Finance Commission also determines the inter-se distribution (horizontal devolution) among states based on various criteria like population, area, forest cover, income distance, fiscal effort, and demographic performance.

Article 270 of the Constitution deals with taxes levied and distributed between the Union and the States.

The divisible pool is a major source of untied revenue for state governments, ensuring their financial stability and autonomy.

The exclusion of cesses and surcharges from this pool reduces the total amount available for states, leading to concerns about fiscal centralization and reduced state fiscal space.

The 15th Finance Commission recommended states' share to be 41% of the divisible pool for the period 2021-26 (a slight adjustment from 42% due to the creation of J&K as UTs).

The Goods and Services Tax (GST) is also a consumption tax shared between the Centre and states, managed by the GST Council, and its proceeds contribute to the overall fiscal transfers.

Comprises the net proceeds of all Union taxes and duties, specifically excluding cesses and surcharges.

The percentage share of states in this pool (vertical devolution) is determined by the President based on the recommendations of the Finance Commission (Article 280).

The Finance Commission also determines the inter-se distribution (horizontal devolution) among states based on various criteria like population, area, forest cover, income distance, fiscal effort, and demographic performance.

Article 270 of the Constitution deals with taxes levied and distributed between the Union and the States.

The divisible pool is a major source of untied revenue for state governments, ensuring their financial stability and autonomy.

The exclusion of cesses and surcharges from this pool reduces the total amount available for states, leading to concerns about fiscal centralization and reduced state fiscal space.

The 15th Finance Commission recommended states' share to be 41% of the divisible pool for the period 2021-26 (a slight adjustment from 42% due to the creation of J&K as UTs).

The Goods and Services Tax (GST) is also a consumption tax shared between the Centre and states, managed by the GST Council, and its proceeds contribute to the overall fiscal transfers.