On December 5, 2019, The 15th Finance Commission headed by economist & former Indian Administrative Service officer (IAS) Shri .Nand Kishore (NK) Singh and its members S/Shri Ajay Narayan Jha, Ashok Lahiri, Ramesh Chand, Anoop Singh and Secretary Shri Arvind Mehta has submitted its report for the financial year (FY) 2020-21 to President Ram Nath Kovind.
The Commission sets the formula for sharing of tax and other resources between the Center and the States.Key Points:
i.President of India constituted the 15th Finance Commission on 27 November 2017 under Article 280 of the Constitution. At that time it was decided to give its recommendations for 1st April 2020 – 31st March 2025.
But on 27 November,2019, the government had issued a notification to give the first report for the financial year 2020-21 by 30 November 2019. The Commission will then make recommendations in its final report for the period from 1 April 2021 – 31 March 2026 by 30 October 2020.
Other Terms of Reference (ToR) of Commission :
i.The Commission should make recommendations on distribution of net proceeds of taxes between Centre and States, the principles which should govern grants-in-aid of revenues of States out of Consolidated Fund of India.
ii.It suggests measures needed to augment Consolidated Fund of State to supplement resources of Panchayats and Municipalities in State on basis of recommendations made by Finance Commission of State.
iii.It also reviews current status of finance, debt levels, cash balances, deficit and fiscal discipline efforts of Centre and States and recommend fiscal consolidation roadmap for sound fiscal management.
iv.It looks at the impact of GST(Goods and Service tax), including payment of compensation for possible loss of revenues for 5 years and abolition of a number of cesses and other structural reforms programme on the finances of Centre and States.