- It was constituted with the approval of the President of India in pursuance of Article 280(1) of the Constitution.
- The government appointed Arvind Panagariya (former vice-chairman of NITI Aayog) as the chairman and members would be notified separately.
- The Commission’s work involves redressing the vertical imbalances between the taxation powers and expenditure responsibilities of the center and the States respectively and equalization of all public services across the States.
- The commission shall make recommendations on the following
- Distribution between the Union and States of the net proceeds of taxes and allocation between the States of such proceeds.
- Principles for governing the grants-in-aid and revenues of the state under Article 275 of the Constitution.
- Measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities based on state finance commission recommendation.
- The commission may review present arrangements for financing Disaster Management initiatives, concerning the funds constituted under Disaster Management Act, 2005.
- The 16th FC recommendations, upon acceptance by the government, would cover the period of five years commencing April 1, 2026.
15th Finance Commission (chaired by NK Singh)
- Set up in 2017, made recommendations for 2020-21 and 2021-22 to 2025-26
- For vertical devolution, the share of states in central taxes is to be 41%.
- Suggested to reduce fiscal deficit to 4% of GDP by 2025-26
- Gave six Criterias for horizontal devolution