NEW DELHI: The Union Cabinet has approved the Terms of Reference (ToR) for the 16th Finance Commission, which will make recommendations on sharing of tax revenues between the Centre and states for the five-year period commencing April 1, 2026. The 15th Finance Commission’s recommendations are valid up to March 31, 2026. According to a release, the 16th commission’s chairmanship and members will be notified later.
The ToR broadly outlines three major areas on which the commission will make suggestions. The commission will determine the formula for distributing the Centre’s tax revenues to states and allocate funds between states. It will also address grants-in-aid to states and the resources of panchayats and municipalities.