Govt. extends 15th finance panel term

News:The Union Cabinet has approved the extension of the term of the 15th Finance Commission setting 30th October,2020 as the new deadline.

Facts:

About Finance Commission:

• 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.
• The Commission is appointed every five years.It consists of a Chairman and four other members.
• The First Finance Commission was constituted in 1951 under the chairmanship of Shri K.C. Neogi.

Finance Commission and its functions:The Finance Commission has the following functions or duties:

• The Commission makes recommendations to the President of India on the distribution of tax proceeds between the Union and the States and the share of each state.
• The Commission also decides the principles that govern the payment of grants-in-aid to states from the Consolidated Fund of India.
• The President of India can also refer any other matter to the Finance Commission in the interest of building a sound financial system.

Members of the Finance commission:

• The Finance Commission has a chairman and four members appointed by the President.
• The Chairman of the Commission is selected from among persons who have had experience in public affairs.
• The four other members are selected from among persons who (a) are or have been or are qualified to be appointed as Judges of the High Court; or (b) have special knowledge of the finances and accounts of Government or (c)have had wide experience in financial matters and in administration or (d)have special knowledge of economics.

Reports of Finance Commission:

• Under Article 281 of the Constitution,the President of India is required to cause laying of the Finance Commission report before each House of Parliament along with an explanatory note and the action taken by the government on the Commission’s recommendations.

The 15th Finance Commission

• The 15th Finance Commission was constituted by the President of India under the chairmanship of NK Singh. 
• This Commission is expected to submit its report by October 2020.Its recommendations will cover a period of five years from April 2021 to March 2026.

Additional information:

About State Finance Commissions:

• The 73rd Constitutional Amendment Act of 1992 created the Panchayati Raj institutions as the third level of a three-tier democratic governance system at the village level, intermediate level and district level. 
• It also mandated the constitution of a Finance Commission every five years by state governments to decide the division of resources (tax proceeds) between a state government and Panchayati Raj institutions at all levels.