It would be premature to comment on the distribution of taxes between states and the Centre due to implementation of the Goods and Services Taxes, 15th Finance Commission Chairman NK Singh said.
The Narendra Modi government had accepted the recommendation of the 14th Finance Commission to share 42 percent of its net tax revenue with states during the five-year period starting 2015-16, from 32 percent earlier. The recommendations of the YV Reddy-led commission are currently valid for a period of five years through March 2020.
Besides, recommending distribution of taxes amongst states and the central government, the 15th Finance Commission will also assess the impact of the Goods and Services Tax, including payment of compensation for revenue losses incurred by states in first five years of the implementation of the new indirect tax, abolition of a number of cesses, and earmarking compensation for other structural reforms, according to a government notification.
The 15th Finance Commission met for the first time in New Delhi today, and discussed ways to address the broad terms of reference given to the committee, Singh told reporters.
"It will be the endeavor of this commission to involve as many research organisations based in different parts of the country to make them important stakeholders because this commission, as mandated by the Constitution, is not merely to govern the central government, but concern the development of states as well," he said.
The commission will hold consultations with all stakeholders including various ministries of the central government, all state governments, local bodies, panchayats and political parties of each state government needed to be expeditiously initiated, said a release issued by Ministry of Finance.
The commission which has Shaktikanta Das, Anoop Singh, Ashok Lahiri and Ramesh Chand as members, and Arvind Mehta as its secretary, approved setting up of its office at Jawahar Vyapar Bhawan in New Delhi.