16th FC Report: Recommendations and Emerging Concerns

The Report of the 16th Finance Commission (Chairman: Dr. Arvind Panagariya) was tabled in Parliament on February 1, 2026 for the five-year period between 2026-27 and 2030-31.

What are the Key Recommendations of the 16th Finance Commission (FC)?

Tax Devolution

  • Vertical Devolution: This is the percentage of the Central Government's Divisible Pool of taxes that is given to the States.
    • Under 16th FC, states’ share in the divisible pool of central taxes was retained at 41%, unchanged from the 15th Finance Commission.
    • The divisible pool excludes cesses, surcharges, and cost of collection from gross central tax revenue.
  • Horizontal Devolution: This ....
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