16th Finance Commission to be constituted by Finance Ministry this Year
The Finance Ministry knowledgeable the Lok Sabha on Monday that the 16th Finance Commission (SFC) can be appointed within the present monetary yr. The SFC’s proposals might be for a five-year period starting in FY27.
Responding to a question from Ambedkar Nagar MP Ritesh Pandey, Minister of State for Finance Pankaj Chaudhury stated sure. “The terms of reference and other modalities are governed by Article 280 of the Constitution,” Chaudhury stated, without answering whether or not the federal government is contemplating addressing the North-South divide in tax devolution and whether or not the 16th Finance Commission will collaborate with the GST council.
The Finance Ministry has allotted a meagre Rs 10 crore in its FY24 Budget for the institution of attached offices for the 16th Finance Commission.
The Finance Commission is a legally mandated body that meets every 5 years to develop components for distributing web tax proceeds between the Centre and the states, as well as between states and native governments. The 15th Finance Commission, led by NK Singh, was established in November 2017 with the mandate to current a report every two years for the next 5 years.
However, as a result of the Covid pandemic, the FFC filed a standalone report for FY21 and a five-year report concluding in FY26. As Jammu and Kashmir were divided into two Union Territories, the FFC decreased the un-tied share of states in web federal taxes to 41% from 42%.
According to D K Srivastava, member of the 12th Finance Commission and chief coverage adviser at EY India, there could also be references to the general dimension of the Indian economic system and the way states might be aided in assembling that purpose. “India’s tax-to-GDP ratio is at an all-time low. The government may request advice from the committee on how to improve the overall tax-to-GDP ratio. The commission may also be asked how to reform the GST and whether some states still need compensation,” he added.