Tax devolution is an important aspect of fiscal federalism in India. It refers to the transfer of revenues collected by the central government to the state governments. The significance of tax devolution and its role in India's governance system can be explained as follows:

• Redistribution of resources: It ensures redistribution of resources from the centre to the states, thereby promoting balanced regional development.
• Autonomy to states: Tax devolution provides financial autonomy to the states, enabling them to decide how to allocate resources for their own development.
• Strengthening the federal structure: It strengthens the federal structure of the country by giving more power and resources to the states.
• Augmenting revenue: It enhances the revenue of the states, which in turn helps in improving their developmental activities such as infrastructure, health, education, etc.
• Equitable distribution: Tax devolution ensures the equitable distribution of financial resources among all states, regardless of their economic condition or political affiliation.
• Boosting local economy: As states have control over the resources, tax devolution helps in the growth of the local economy by promoting entrepreneurship and creating job opportunities.

Hence, tax devolution plays a crucial role in shaping India's governance system by empowering the states and promoting regional development.