Sixteenth Finance Commission will be constituted in November 2023

  • The government official has informed that the union government may set up the 16th finance commission this FY 2023-24.
  • Aim: To suggest the ratio in which tax is to be divided between the Centre and states for five years, beginning April 1, 2026.
  • Finance Commission is a constitutional body that gives suggestions on Centre-state financial relations.
  • The 15th Commission, under NK Singh, had kept the tax devolution ratio at 42%.

The Finance Commissions are commissions periodically constituted by the President of India under Article 280 of the Indian Constitution to define the financial relations between the central government of India and the individual state governments. The First Commission was established in 1951 under The Finance Commission (Miscellaneous Provisions) Act, 1951. Fifteen Finance Commissions have been constituted since the promulgation of Indian Constitution in 1950. Individual commissions operate under the terms of reference which are different for every commission, and they define the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.[1] As per the constitution, the commission is appointed every five years and consists of a chairman and four other members.