16th Finance Commission's Recommendations to Shape Budget 2027

• The 16th Finance Commission has submitted its report to President Droupadi Murmu, with its recommendations set to be included in the Union Budget for Fiscal Year 2027.
• Chaired by Arvind Panagariya, the commission, a constitutional body, provides a formula for tax distribution between the Centre and states.
• Key members include Annie George Mathew, Manoj Panda, Soumya Kanti Ghosh, T. Rabi Sankar, and Ritvik Pandey, who submitted the report on November 17, 2025.
• The central government traditionally accepts the Finance Commission's recommendations, which cover a five-year period starting April 1, 2026.
• The 15th Finance Commission, led by N. K. Singh, recommended states receive 41% of the Centre's divisible tax pool for 2020-21 to 2025-26, using criteria like population, area, and fiscal effort.

Why It Matters: The 16th Finance Commission's report, submitted to the President, will guide Centre-state tax distribution in Budget 2027.