Key Points
The commission is tasked with making recommendations related to the distribution of tax revenues between the Union (central government) and the states...
The Union Cabinet gave its nod to the 'Terms of Reference' or ToR for the 16th Finance Commission, which will be responsible for providing recommendations on the distribution of tax revenues between the central government and states...
Its primary role is to provide recommendations regarding the distribution of net tax proceeds between the Union and states, the allocation of shares among states, grants-in-aid, state revenues, and measures required to enhance the resources of 'panchayats' during the award period...
The allocation of net tax proceeds between the Union (central government) and states, as outlined in Chapter I, Part XII of the Constitution, and the distribution of respective shares among states are key components of the ToR sanctioned by the Cabinet...
The Finance Commission constituted every fifth year or earlier, plays a pivotal role in shaping fiscal relationships between the Union and states..
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