The Government of India has appointed four members to the 16th Finance Commission, which will have a tenure of five years.

Four members are:

A.N. Jha, former expenditure secretary and member of the 15th Finance Commission
Annie George Mathew, special secretary of the department of expenditure
The State Bank of India's Soumya Kanti Ghosh, group chief economic advisor
Niranjan Rajadhyaksha, Executive Director of Artha Global

The Sixteenth Finance Commission is headed by Arvind Panagariya, who was earlier vice chairperson of NITI Aayog.

The commission will define the distribution of the Centre’s tax revenue to states for the next five years, starting in FY2027.
The Finance Commission's report must be submitted by October 31, 2025 and cover a five-year period from April 1, 2026.
President Droupadi Murmu approved a notification stating that the chairman and other members of the Commission shall hold their office from the date they assume their respective positions until the submission of the report or October 31, 2025, whichever is earlier.
The SFC will ensure that the states have sufficient financial resources. The SFC will suggest steps to augment the consolidated funds of the states for panchayats and municipalities.
Moreover, it will also review national and state disaster management funds.
The government has kept the 'terms of reference' of the commission short, providing the SFC with the flexibility to make recommendations on tax revenue sharing within constitutional limits."

About Finance Commision

The Finance Commission is constitutionally required to be constituted every five years or earlier. It usually takes the commission about two years to create their recommendations, according to Article 280(1) of the Constitution.

Terms of Reference for the Sixteenth Finance Commission:

The Finance Commission shall make recommendations as to the following matters, namely:

How to divide the net proceeds of taxes between the Union and the States, as per Chapter I, Part XII of the Constitution and how to allocate the shares of such proceeds among the States.
The principles that should guide the grants-in-aid of the States' revenues from the Consolidated Fund of India and the amounts to be paid to the States by way of grants-in-aid of their revenues under Article 275 of the Constitution, for purposes other than those specified in the proviso to clause (1) of that article.
The steps required to increase the Consolidated Fund of a state to supplement the resources of the panchayats and municipalities in the state are based on the Finance Commission of the State's recommendations.

K.C. Neogy was Chairman of the First Finance Commission.

The Fifteenth Finance Commission was headed by Shri. N.K. Singh