---
title: "Finance Commission — Definition & Meaning | Model Diplomat"
description: "The Finance Commission is a constitutional body in India under Article 280, recommending tax revenue distribution between the Union and States every five years."
url: "https://modeldiplomat.com/learn/glossary/finance-commission"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The Finance Commission is a constitutional body under Article 280 of the Indian Constitution, constituted every five years to recommend the distribution of tax revenues between the Union and the States.
- Under which constitutional article is the Finance Commission established and how often?
- Are the recommendations of the Finance Commission binding on the government?
- How does the Finance Commission differ from NITI Aayog?
- Who chairs the Sixteenth Finance Commission and what is its award period?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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## Timeline

1. 31 October 2025

   As of 2026, the Sixteenth Finance Commission, chaired by Arvind Panagariya (constituted December 2023), is finalising recommendations for the award period 20…

2. 1 April 2026

   As of 2026, the Sixteenth Finance Commission, chaired by Arvind Panagariya (constituted December 2023), is finalising recommendations for the award period 20…

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In 2015, the Fourteenth Finance Commission under Y.V. Reddy raised the States' share of the divisible tax pool from 32% to 42%, the single largest jump in devolution in India's federal history.

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