Sixteenth Finance Commission

Set up under Article 280 to decide how much of the Centre's tax kitty flows to states and on what basis, the Sixteenth Finance Commission (XVI-FC) handed its report to the President in November 2025, and Parliament finally saw it in February 2026, riding alongside the Union Budget. Its headline call — hold the states' share at 41 per cent, same as before — masks a more consequential shift underneath: for the first time, how much a state adds to national GDP now counts toward what it gets back, alongside the older yardsticks of population, area, forests and income gaps. The government took the tax-sharing and grants package without changes but pointedly stopped short of committing to the Commission's tougher borrowing-discipline proposals, leaving those for a later round of examination.