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Terms of Reference for 16th Finance Commission (2026-2031)
December 7 , 2023
354 days
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- Recently, the Union Cabinet has given the nod to the terms of reference (ToR) for the Sixteenth Finance Commission.
- This commission holds the critical responsibility of recommending the formula for revenue distribution between the Centre and the States for the upcoming five-year period starting from April 1, 2026
- The recommendations of the Fifteenth Finance Commission are valid up to the financial year 2025-26.
- The government has set a deadline of October 31, 2025, for the panel to submit its recommendations.
- The key recommendation will be the distribution of net proceeds of taxes between the Centre and States and allocation among States of the respective share of such proceeds.
- The panel will also prescribe measures needed to augment the Consolidated Fund of a State to supplement resources of the panchayats and local bodies on the basis of recommendations made by the respective State Finance Commissions.
- The panel will recommend principles that should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India and the sums to be paid to the States by way of grants-in-aid of their revenues.
- Also, it may review the existing arrangements on financing Disaster Management initiatives and make appropriate recommendations.
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