Union cabinet approves terms of reference for 16th Finance Commission

The government has approved the terms of reference for the 16th Finance Commission, which decides on sharing of tax revenues between the Centre and States, Information and Broadcasting Minister Anurag Thakur said on Wednesday.

The decision was taken on Tuesday evening at a Union Cabinet meeting.

Thakur said the 16th Finance Commission will submit its report by October 2025 and the recommendations will be valid for a five-year period beginning April 2026.

Set up under Article 280 of the Constitution, the core responsibility of Finance Commission is to evaluate the state of finances of the Union and State governments, recommend the sharing of taxes between them and lay down the principles determining the distribution of these taxes among States.