Chandra, an IIT graduate, is a 1980 batch officer of the Indian Revenue Service (Income Tax cadre).
The Law Ministry issued a notification announcing his appointment.
Chandra, 61, will have to resign from CBDT, where he is serving, before joining the poll panel.
He will assume his new charge on Friday.
Since Chandra has expertise in taxation and investigation, he could help the poll panel in election expenditure by political parties and candidates, a senior EC official felt.
Chandra was appointed as CBDT chief in November, 2016 and has since been given two extensions. He was due to retire in May.
When Om Prakah Rawat retired as chief election commissioner in November, 2018, Arora, then an election commissioner, took over as the chief of the poll panel. After Rawat's retirement, there was a vacancy in the election watchdog which has now been filled.
While Arora and Lavasa are 1980 batch IAS officers, Chandra is also from the 1980 batch, but from IRS.
Chandra will retire in May, 2022 on turning 65. Lavasa would retire a few months later in October, 2022. CEC Arora has a tenure till April, 2012.
The CEC or an EC can have a tenure of six years or hold office till the age of 65 years, whichever is earlier. The convention is to appoint the senior-most election commissioner as chief election commissioner.
Chandra completed his B Tech from Roorkee University and LLB from Dehradun and joined Indian Revenue Service in 1980.
He has served in Uttar Pradesh, Rajasthan, Delhi, Gujarat and Mumbal and has worked in the areas of international taxation and investigation at various places.
He was commissioner of Income Tax (Appeals) International Taxation at Delhi.
Before being appointed chairman of CBDT, he was member (Investigation) in the Board.