The Union cabinet on 22 November 2017 approved the setting up of the 15th Finance Commission, which will decide on the distribution of tax proceeds among centre, states and local bodies in the post-goods and services tax (GST) era. A finance commission is set up every five years. The government had allocated Rs10 crore in the 2017-18 budget to the 15th Finance Commission.
The terms of reference of the 15th Finance Commission will be notified in due course. “The next step will be to finalize the members and chairperson of the finance commission after which it will start functioning,”. It was but natural that the exercise under the 15th Finance Commission will be slightly different compared to previous finance commissions after the implementation of GST on 1 July took away the taxing authority of state governments.
The 14th Finance Commission is considered to have fundamentally reset the centre-state fiscal relationship by raising the untied share of states in net central taxes to 42% from 32% after ending discretionary resource transfers from the centre to the states. The cabinet also approved India’s membership of the European Bank for Reconstruction and Development. The membership will enhance India’s international profile and help India’s private sector leverage technical assistance and financial opportunities.