Finance Commission was formed under article 280 of the constitution. The first Finance Commission was set up in the year 1951 and K.C, Niyogi was appointed its Chairman. Finance Commission is a constitutional body which defines the centre-state federal relations. The Finance Commission is constituted by the President to give its recommendations on distribution of tax revenues between the Union and the States and amongst the States themselves. Thus it is the primary and foremost task of the Finance Commission.
One of the important responsibilities of the Finance Commission is to take measures needed to boost the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State as per the recommendations made by the Finance Commission of the State.
In fact, the Finance Commission generally requires about two years to finalize its recommendations. According to Article 280 Clause (1) of the Constitution, the Finance Commission should be formed every five years or earlier. Given that the recommendations of the 15th Finance Commission will extend until March 31, 2026, the 16th Finance Commission is now proposed to be set up. This timing will allow the new commission to evaluate and review the finances of both the Union and the States for the period immediately preceding its recommendations. Notably, there are precedents for such timing adjustments: the Eleventh Finance Commission was constituted six years after the Tenth Finance Commission, and the Fourteenth Finance Commission was established five years and two months after the Thirteenth Finance Commission.
So far 16 finance commissions have been appointed, the details of which are given as under.
| FINANCE COMMISSION | CHAIRMAN | YEARS OF ESTABLISHMENT | DURATION |
| I | K C Niyogi | 1951 | 1952–57 |
| II | K Santhanam | 1956 | 1957–62 |
| III | A K Chanda | 1960 | 1962–66 |
| IV | P V Rajamannar | 1964 | 1966–69 |
| V | Mahaveer Tyagi | 1968 | 1969–74 |
| VI | Brahma Nand Reddy | 1972 | 1974–79 |
| VII | J M Shellet | 1977 | 1979–84 |
| VIII | Y B Chawan | 1983 | 1984–89 |
| IX | N K P Salve | 1987 | 1989–95 |
| X | K C Pant | 1992 | 1995–2000 |
| XI | A M Khusro | 1998 | 2000–2005 |
| XII | C Rangarajan | 2003 | 2005–2010 |
| XIII | Vijay Kelkar | 2009 | 2010–2015 |
| XIV | Y V Reddy | 2013 | 2015–2020 |
| XV | Shri N.K. Singh | 2017 | 2020-25 |
| XVI | Dr. Arvind Pangariya | 2023 | 2026-2031 |
SIXTEENTH FINANCE COMMISSION
The Sixteenth Finance Commission is supposed to make recommendations to the following matters:
The distribution between the Union and the States of the net proceeds of taxes which are to be, divided between them under Chapter I, Part XII of the Constitution and the allocation between the States of the respective shares of such incomes;
The principles which is to be governed 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 as per article 275 of the Constitution for the purposes other than those specified in the provisos to clause (1) of the article;
The measures required to raise the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.