16th Finance Commission- Article-280

Cabinet approves creation of 3 officer-level posts for 16^th Finance Commission.

Chairman – Arvind Panagariya
Secretary – Ritvik Ranjanam Pandey
3 new posts – Created at the level of Joint Secretary i.e. 2 posts of Joint Secretary and 1 post of Economic Adviser who are required to assist the Commission in carrying out its functions.
Functions – To suggest the principle of tax devolution between the Centre and States and revenue augmentation measures.
To review the present arrangements for financing disaster management initiatives with reference to the funds constituted under the Disaster Management Act, 2005.
Reporting – It would submit its report to the President by October 31, 2025 and it would be for 5 years commencing April 1, 2026.

Finance Commission of India (FC)

It is a quasi-judicial constitutional body under Article 280 of Indian constitution.
Constituted by – The President of India every 5^th year or at such earlier time as he considers necessary.
1^st FC – 1951 chaired by
Role – To make recommendations regarding
- Sharing of central taxes with states
- Distribution of central grants to states
- Measures to improve the finances of states to supplement the resources of panchayats and municipalities, and
- Any other matter referred to it.
Limitations – Recommendations are only advisory in nature and hence, not binding on the government.

The erstwhile 15th Finance Commission under N.K. Singh had recommended that States be given 41% of the divisible tax pool of the Centre during 5-year period 2021-22 to 2025-26, which is at the same level as was recommended by the 14th Finance Commission.

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