Union Budget 2026: Sixteenth Finance Commission report for 2026-31 tabled in Parliament

Ahead of the Union Budget 2026-27, Union Finance Minister Nirmala Sitharaman on Sunday (February 1, 2026) tabled the Sixteenth Finance Commission (16th FC) report for tax revenue devolution between Centre and States for 2026-2031 in the Lok Sabha.

After laying the report, Ms. Sitharaman began the presentation of her ninth record Budget in the Lok Sabha that comes in the backdrop of global uncertainties and slowdown in exports.

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In November 2025, the Sixteenth Finance Commission, chaired by economist Arvind Panagariya, submitted its report to the President of India, the office of the President.

Apart from deciding on the Centre-States tax division, the 16th FC was also tasked with recommending the principles that should govern the grants-in-aid transferred by the Centre to the States. It also recommended the measures needed to augment the funds of the States to supplement the resources of their panchayats and municipalities. 

The 16th FC’s recommendations would apply for a period of five years beginning on April 1, 2026.

The primary task of the successive Finance Commissions, including the Sixteenth, is to recommend the basis for the distribution of taxes between the Centre and the States, including the break-up among States.