It recommends how tax revenues are shared between the Union and states. The 16th Commission’s award will apply from April 1, 2026
Most states are asking for 45–50% of the divisible pool, up from 41%
Cesses and surcharges are not shared with states. Their growing use reduces effective devolution
Tamil Nadu wants GDP contribution considered in revenue sharing—raising fresh debates on fairness
Rationalising centrally sponsored schemes could give states more flexibility to meet local needs
Many states face unsustainable debt. The Commission must incentivise better fiscal discipline