CHENNAI: The Tamil Nadu Assembly is set to adopt a resolution during the ongoing session demanding the State’s due share in financial devolution from taxes collected by the Union government.
The proposal was announced by Governor Rajendra Arlekar in his address to the Assembly on Thursday.
“A resolution will be passed in the Assembly demanding Tamil Nadu’s rightful share in the financial devolution of taxes contributed to the Union government. In addition, a Special Legal Committee will be constituted to pursue the matter legally up to the Supreme Court,” the Governor said.
The Governor also outlined the State’s fiscal challenges, noting a sharp increase in the revenue deficit over the past year. According to the address, Tamil Nadu’s revenue deficit rose from Rs 48,840 crore in 2024-25 to Rs 78,324 crore in 2025-26, accounting for 2.2 per cent of the Gross State Domestic Product (GSDP).
Highlighting the pressure on State finances, Arlekar said nearly 23 per cent of Tamil Nadu’s total revenue receipts were being spent on interest payments alone.
He further stated that revenue leakages and systemic irregularities in revenue and tax-collecting departments had adversely affected tax collections. According to the Governor’s Address, the State’s own tax revenue declined from 5.93 per cent of GSDP in 2021-22 to 5.45 per cent in 2025-26.