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15th Finance Commission
November 23 , 2017
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- The Union Cabinet chaired by the Prime Minister has approved setting up of 15th Finance Commission (FC) which will assess the tax resources of the nation and suggest a formula for their devolution among states.
- This time it will have to take into account the impact of the Goods and Services Tax, on the resources of the central as well state governments.
- Article 280 of the Constitution requires setting up of a finance commission within two years from the commencement of this Constitution and thereafter at the expiration of every fifth year.
- The setting up of the finance commission for every 5 years is a Constitutional obligation under Article 280 (1) of the Constitution.
- The Finance Commission (Miscellaneous Provisions) Act of 1951additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
- FC is a constitutional as well as quasi-judicial body and is constituted by the President of India every fifth year. The recommendations made by FC are only advisory in nature and hence, are not binding on the government.
- The Finance Commission is set up every five years to suggest rules that govern the distribution of tax proceeds among the Centre, states and local administrative bodies.
- The Fourteenth Finance Commission was headed by former Reserve Bank of India governor Y V Reddy.
- The 1971 Census was used till the 14th FC, though it recommended distribution of grant to states for local bodies using the 2011 Census.
- The recommendations of the 14th Finance Commission are valid from 2015 to 2020.
- The recommendations of the 15th Finance Commission will be implemented in the period 2020 to 2025.
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