The Finance Commission is a constitutional body the President constitutes every fifth year (or earlier). It recommends how the net proceeds of shared taxes are divided between the Union and the states, how they are split among states, the principles for grants-in-aid to states under Article 275, and measures to fund panchayats and municipalities. It has a chairman and four members.
Key facts
- Constituted every fifth year or earlier; recommends vertical and horizontal tax devolution and grants-in-aid.
- The 16th Finance Commission has a chairman and four members, including T. Rabi Sankar, Annie George Mathew, Manoj Panda and Soumya Kanti Ghosh. (as of 23 Oct 2026)
- The 15th Finance Commission's recommendations ran to 31 March 2026.
- Its recommendations are advisory; the Union government lays them before Parliament with an action-taken report.
Why exams ask about it
The Article, the first chairman, the current chairman and the share of taxes devolved are the usual questions.