Fifteenth Finance Commission

The government has approved the 'Terms of Reference' for the 16 Finance Commission, which makes recommendations on sharing of tax revenues between the Centre and states. The recommendations would cover a five-year period commencing April 1, 2026, Information and Broadcasting Minister Anurag Thakur said on Wednesday, giving details about the decisions taken at the Cabinet meeting last evening. The commission would submit its report by October 31, 2025, Thakur said. The 15th Finance Commission was constituted on November 27, 2017. It made recommendations covering a six-year period commencing April 1, 2020 through its interim and final reports. The recommendations of the 15th Finance Commission are valid up to financial year 2025-26. Article 280(1) of the Constitutions lays down the modalities for setting up of a Finance Commission to make recommendation on the distribution of net proceeds of taxes between the Union and states; allocation between states of respective shares of such

The 15th finance commission has recommended revenue deficit grants worth Rs 2.95 trillion for 17 states between FY22 to FY26

With the release of this installment, a total amount of Rs 74,340 cr has been released to eligible states in FY21, says Ministry of Finance

Higher tax-GDP is a must for financing security and development

The Commission asserts salary incomes shown by taxpayers are understated by 50%, finds scope to extract more direct tax by chasing evasion without changing tax rates; experts aren't convinced

Here's a selection of Business Standard opinion pieces for the day

The Commission has also accomplished a remarkable job, given the clumsy and normatively biased Terms of Reference (ToR) that it had to work with

Revenue of Centre and states is just 19 per cent of GDP, according to the International Monetary Fund.

Singh also called for moving to a fiscal deficit range rather than a specific number to better judge expenditure outcomes of states

Says finance commission's job is to reconcile divergent objectives

It is vital that we have a proper discussion on the medium-term economic and fiscal situation based on the Fifteenth Finance Commission medium-term assessment

The 15th Finance Commission Chairman had pushed for a range instead of a fixed number, saying it is more realistic and will lead to less accounting engineering

An official statement said that the Commission had called for this meeting more specifically for the purpose of making its recommendations in its report for FY21 and FY26 on the subject of education

Increasing grants and tied funds not enough

Revenues for 2019-20 projected in the July Budget simply cannot be realised

This comes days after IMF Chief Economist Gita Gopinath cautioned the Fund may revise India's growth forecast 'significant downward'

Talking to reporters, Finance Commission Chairman N K Singh said the Commission plans to make recommendations on Goods and Services Tax (GST), which will be for the GST Council to consider

The official said that GST needed to be revenue neutral and that the GST Council needed to move from multiplicity of rates to one standard rate.

The interim report is likely to be made public just before or on the day of the Budget

Centrally sponsored schemes are funded by Centre and states combined, as opposed to central sector schemes which are funded wholly by the Centre