The government is expected to set up the 16th Pay Commission this year. According to the PTI report, an official said that work is being done on the commission and its term of reference.
The government is expected to set up the 16th Pay Commission this year. According to the PTI report, an official said that work is being done on the commission and its term of reference. The Finance Commission is a constitutional body, which gives suggestions on the financial relations of the Central and State Governments. The last Finance Commission submitted its report to the President on 9 November 2020. It was for five financial years i.e. from 2021-22 to 2025-26.
Commission will give recommendation on distribution of tax
According to the report, the commission will suggest in what ratio the tax should be divided between the central and state governments. This will be fixed for a period of five years, starting from 1 April 2026.
The 15th Commission headed by NK Singh had fixed the tax devolution ratio at 42 per cent, which was at the same level as recommended by the 14th Commission. The Central Government had approved the report of the commission and accordingly states are being given a tax pool of 42 per cent for the period 2021-22 to 2025-26.
The recommendations of the 15th Finance Commission included fiscal deficit, way forward for arrears for the Center and states, and performance-based additional debt to states in power sector reforms.
On what things does the commission give recommendations?
Let us tell you that the Finance Commission decides which state should get how much money as revenue deficit. Only the Finance Commission tells how much is the expenditure of which state and how much is its deficit. To make up for this loss, the amount is issued by the central government in different EMIs. This amount is given to the states in 12 EMIs, out of which 8 EMIs have been given. The remaining 4 EMIs will be released further.
Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tripura, Uttarakhand and Bengal are among the states which have been recommended by the 15th Finance Commission. These states have been given grants for the revenue deficit for this financial year. In the future, grants will be released to other states as well, which will be based on the recommendations of the Finance Commission.
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