16th Finance Commission Recommendations to Be Included in Upcoming Budget

The recommendations of the 16th Finance Commission will be incorporated in the upcoming Union Budget. The commission has already submitted its report to President Droupadi Murmu.

Constituted under the Constitution, the Finance Commission provides a formula for the distribution of taxes between the Centre and the states. Taxes collected through cess and surcharge by the Centre are not part of the divisible pool shared with the states.

The Finance Commission is a constitutional body that offers recommendations on Centre–state financial relations and is constituted periodically to address evolving fiscal requirements.

The 16th Finance Commission was constituted on December 31, 2023, under the chairmanship of former NITI Aayog Vice Chairman Arvind Panagariya.

Under Panagariya’s leadership, the commission included members such as retired bureaucrat Annie George Mathew, economist Manoj Panda, SBI Group Chief Economic Advisor Soumya Kanti Ghosh, RBI Deputy Governor T. Rabi Sankar, and Commission Secretary Ritvik Pandey.

The commission submitted its report to President Murmu on November 17, 2025. Copies of the report were also handed over to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman.

Although the report of the 16th Finance Commission has not yet been made public, the central government has traditionally accepted most of the commission’s recommendations.

As per its Terms of Reference (ToR), the 16th Finance Commission was mandated to submit recommendations covering a five-year period beginning April 1, 2026.