16th Finance Commission recommends 41% tax devolution to StatesOn February 1, 2026, the Union Finance Minister (FM) Nirmala Sitharaman tabled the 16th Finance Commission (FC) report in Parliament alongside the presentation of the Union Budget for 2026–27, with the government accepting its key recommendation to retain the states’ share in central taxes at 41% for the period 2026–31.
Key Recommendations
Share of States: The 16th FC has recommended that the Central Government (CG) retain the 41% share of tax devolution to the States that had been implemented since 2021.
Criteria for Devolution: To provide for the distribution of central taxes among states, FC define a formula with weightage for certain parameters.
Key Recommendations
Share of States: The 16th FC has recommended that the Central Government (CG) retain the 41% share of tax devolution to the States that had been implemented since 2021.
Criteria for Devolution: To provide for the distribution of central taxes among states, FC define a formula with weightage for certain parameters.
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