The southern States will collectively receive just over 17 per cent of the ₹15.26 lakh crore total divisible pool in central taxes and duties (Budget Estimates) in 2026–27, after the Centre accepted the 16th Finance Commission’s recommendation to raise their combined share from 15.8 per cent.
The increase comes despite the overall divisible pool remaining fixed at 41 percent, first set by the 15th Finance Commission.
The NDA-ruled Andhra Pradesh, led by Chief Minister N Chandrababu Naidu, is set to be the biggest beneficiary under the new formula. It will receive ₹64,362.16 crore, with its share rising to 4.217 percent of the divisible pool.
Karnataka will receive ₹63,049.58 crore, or 4.131 percent, despite being the second-highest tax-paying State in the country. This allocation falls short of the State’s demand to restore its pre-2021 share of around 4.71 percent or higher.
Tamil Nadu follows close behind, with an allocation of ₹62,530.65 crore, based on a share of 4.097 per cent.
Kerala will see the largest rise in its share of the divisible pool among the southern States. Its allocation rises to 2.382 percent from 1.925 percent, taking its receipts to ₹36,355.39 crore from the ₹15,26,254.58 crore divisible pool for the 2026–27 fiscal year.
Telangana, meanwhile, sees only a modest uptick, with its share rising from 2.102 per cent to 2.174 per cent. Its allocation for the year is set at ₹33,180.78 crore.
Steady rise in receipts since 2021
From 2021–22 to 2025–26, the overall tax pool grew. Over these five years, the total tax devolution pool expanded from ₹8,53,107.10 crore in 2021–22 to ₹14,22,444.11 crore in 2025–26.
Tamil Nadu was the biggest recipient among the southern States. With a fixed share of 4.079 percent, it received the highest allocation in every one of these five years. Its receipts rose from ₹33,387.68 crore in 2021–22 to ₹38,731.24 crore, ₹45,780.58 crore, ₹52,491.88 crore, and ₹58,021.50 crore in 2025–26.
Andhra Pradesh’s share was fixed at 4.047 per cent throughout this period. Its receipts rose from ₹33,376.22 crore in 2021–22 to ₹38,176.74 crore in 2022–23, ₹45,421.33 crore in 2023–24, ₹52,080.15 crore in 2024–25, and ₹57,566.31 crore in 2025–26.
Karnataka’s share was fixed at 3.647 percent. Its receipts rose from ₹29,884.32 crore in 2021–22 to ₹34,596.18 crore, ₹40,931.82 crore, ₹46,932.72 crore, and ₹51,876.54 crore by 2025–26.
Kerala’s share was fixed at 1.925 per cent. This yielded ₹15,774.23 crore in 2021–22, followed by ₹18,260.68 crore, ₹21,605.26 crore, ₹24,772.38 crore, and ₹27,382.06 crore over the next four years.
Telangana’s share was fixed at 2.102 percent. Its allocations rose from ₹17,496.24 crore to ₹19,668.15 crore, ₹23,591.72 crore, ₹27,050.25 crore, and ₹29,899.77 crore over the same period.
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