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Business News/ Economy / Union Cabinet may consider constitution of 16th Finance Commission today: Report
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Union Cabinet may consider constitution of 16th Finance Commission today: Report

Earlier, Finance Secretary T V Somanathan had stated that the panel would formed by the end of November.

File image of Prime Minister Narendra Modi chairing a meeting of the Union Cabinet, at Parliament House Annexe in New Delhi (ANI Photo) (ANI)Premium
File image of Prime Minister Narendra Modi chairing a meeting of the Union Cabinet, at Parliament House Annexe in New Delhi (ANI Photo) (ANI)

The Union Cabinet, in a meeting scheduled late on November 28, may take up the constitution of the 16th Finance Commission, a report said. 

The Cabinet is scheduled to meet in New Delhi at 8 pm, and the panel's formation may be considered, CNBC-TV18 reported. There was no official statement at the time of publishing this report.

The 16th Finance Commission will be tasked to initiate the layout of Centre-state financial relations for coming five years. Its predecessor, the 15th Finance Commission, had submitted its report in November 2020 that was applicable for financial year 2021-22 to 2025-26.

Also Read: What 15th Fin Comm award means for India's states, in five charts

Earlier, Finance Secretary T V Somanathan had told news agency PTI in August that the 16th Finance Commission would be constituted by November-end.

"The Finance Commission is expected to be constituted by end of November because that's the statutory requirement," he told the news agency in an interview.

One of the main tasks of the 16th Finance Commission will be to suggest the ratio in which the tax will be divided between the Centre and states for five years, starting from April 1, 2026.

Tax devolution is a major source of funds for states, used for spending on development, welfare and priority-sector projects and schemes. Currently, 41 percent of taxes collected by the Centre is devolved in 14 instalments among states during a fiscal year.

Also Read: The state-versus-centre battle for resources, in six charts

From the 11th Finance Commission to the 14th, the share of net proceeds recommended to be devolved to states increased each time: from 29.5% to 30.5% to 32% to 42%. Net proceeds are defined in Article 279 of the Constitution as gross tax revenue of the Centre less surcharges and cesses, and cost of collection.

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Published: 28 Nov 2023, 07:49 PM IST
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