Arvind Panagariya, former Vice Chairman of NITI Aayog,  was designated as the head of the 16th Finance Commission.  Ritvik Ranjanam Pandey will hold the post of secretary to the commission. that other members of the commission will be notified separately.

Terms of Reference(TOR) for the Sixteenth Finance Commission:

The Finance Commission shall make recommendations as to the following matters, namely:

The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under Chapter I, Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds;

The principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India and the sums to be paid to the States by way of grants-in-aid of their revenues under Article 275 of the Constitution for purposes other than those specified in the provisos to clause (1) of that article; and

The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State are based on the recommendations made by the Finance Commission of the State.

The Commission may review the present arrangements on financing Disaster Management initiatives, about the funds constituted under the Disaster Management Act, 2005 (53 of 2005), and make appropriate recommendations thereon.

The Commission shall make its report available by the 31st day of October 2025 covering five years commencing on the 1st day of April 2026.

LEARNING FROM HOME/WITHOUT CLASSES/BASICS

The Finance Commission is constituted by the President under article 280 of the Constitution, mainly to give its recommendations on distribution of tax revenues between the Union and the States and amongst the States themselves.

It is the duty of the Commission to make recommendations to the President as to—  

• the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them and the allocation between the States of the respective shares of such proceeds; 
• the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India;
• the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the State on the basis of the recommendations made by the Finance Commission of the State;
• the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State;
• any other matter referred to the Commission by the President in the interests of sound finance.

The President shall cause every recommendation made by the Finance Commission under the provisions of this Constitution together with an explanatory memorandum as to the action taken thereon to be laid before each House of Parliament(Art. 281))

The First Finance Commission was constituted under the chairmanship of Shri K.C. Neogy.