Meghalaya top beneficiary of central tax doles: Report

SHILLONG, April 30: Meghalaya contributes very little in direct taxes to the central government — yet it receives more financial support than any other state in India. For every Rs 100 it pays in taxes, it gets back nearly Rs 5,000 in return, says a report by Wint Wealth, an online platform for retail investors.
The report places Meghalaya at the top of the list of net beneficiaries of central transfers, making it an outlier in India’s fiscal map.
Meghalaya’s numbers are striking when compared to other states. The state receives Rs 4,983 for every Rs 100 it pays in taxes. Mizoram follows with Rs 3,583, Nagaland with Rs 2,525, and Bihar with Rs 1,334. In contrast, industrialised states like Maharashtra and Delhi receive just Rs 10.10 and Rs 10.80, respectively, for every Rs 100 they contribute.
Meghalaya’s heavy dependence on central funds is driven by several factors. The state has a small and largely tribal population, most of whom live in protected areas governed by Sixth Schedule provisions. These areas are exempt from paying income tax, which significantly reduces the state’s tax base. Meghalaya also lacks major industries or large-scale businesses, so its contribution in the form of corporate tax is minimal.
According to the 2024–25 state budget, Meghalaya expects revenue receipts of Rs 23,515 crore, but only Rs 4,788 crore, or around 20%, will come from its own taxes and fees. The remaining 80% will come from central sources, including tax devolution and grants.
This central assistance has increased over the years. The 15th Finance Commission raised Meghalaya’s share in the divisible pool of central taxes from 0.642% to 0.765%, resulting in a significant jump in annual receipts from Rs 4,212 crore in 2019–20 to Rs 9,466 crore in 2024–25.
On paper, Meghalaya appears fiscally sound. It is a revenue-surplus state, meaning it earns more than it spends. However, a closer inspection reveals that nearly 95% of the revenue is used for day-to-day administrative expenses being salaries, pensions, office maintenance — leaving little room for capital expenditure, which is crucial for long-term development.
Despite the inflow of funds, the state still struggles to develop or maintain basic infrastructure. Many rural roads remain poorly maintained, healthcare services in remote districts are weak, and internet connectivity is patchy.
A recent Comptroller and Auditor General (CAG) report even flagged concerns that the bulk of funds are not translating into meaningful development in the state.