16th Finance Commission Recommendations to Shape Budget 2026: Tax Share for States Revealed

• Finance Minister Nirmala Sitharaman will table the 16th Finance Commission's report, chaired by Arvind Panagariya, during the Budget 2026 presentation.
• The recommendations, accepted by the Centre, will govern tax distribution between the Centre and states for five years, from 2026-27 to 2030-31.
• The constitutional body determines vertical (Centre-states) and horizontal (state-to-state) tax devolution, considering factors like population, income, and financial management.
• Key issues include southern states' concerns over population control impacting their share and opposition-ruled states' demands for a fairer share of GST and cess revenue.
• The report aims to strengthen cooperative federalism and ensure balanced development funding, addressing concerns while ensuring equitable distribution.

Why It Matters: The 16th Finance Commission's report will define Centre-state tax sharing for 2026-31, impacting state finances and development.