Tenth Finance Commission

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The Tenth Finance Commission was incorporated in the year 1995. The tenth Finance Commission will make recommendations for the distributions of the net proceeds of taxes between the Union and the states and also on the norms related to the grants-in-aid allotted to the states to raise their income. Other activities in which the Tenth Finance Commission is involved include suggesting changes with respect to the net proceeds in terms of additional excise duties on commodities under Additional Duties of Excise (Goods of Special Importance) Act, 1957 in the place of sales tax and the repealed tax on the railway passengers, evaluating the population factor for degeneration of taxes, duties, and the grants-in-aid in the states, and lastly the commission also reviews the present scheme of Calamity Relief Fund.

Undertakings of the Tenth Finance Commission
  • The Tenth Commission makes recommendations for the distribution of the net proceeds of the taxes between the Union and the states as per Chapter I of Part XII of the Constitution of India along with the allotment of shares within the states

  • The commission also makes recommendations for the regulations for the grants-in-aid, which are formulated with the aim to uplift the income of the states under clause (1) of Article 275 of the Constitution of India.

  • The tenth finance commission can suggests changes apropos the additional excise duties levied upon the commodities under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 as a replacement of the sales tax imposed on them by the government formerly

  • The commission also modifies the rules governing the repealed tax levied on the railway passengers under Railway Passenger Fares Act, 1957

  • It also evaluates the population ratio before making recommendations for the distribution of taxes and duties

  • The commission also reviews the Calamity Relief Fund and the financial status of the states in terms of debt positions

Tenth Finance Commission at a glance

The Tenth Finance Commission while making recommendation considers the following points
  • To maintain the entire detail regarding expenditures on income by various states as well as generating capital investment system and thereby reducing the financial crisis

  • To evaluate the resources provided to the states by the Central Government in terms of civil administration, defense and border security, servicing of debts, and other committed expenses or liabilities

  • To maintain the capital assets and expenditures on various developmental plan schemes as are carried out by the states

  • The basic requirements of the states in terms of improving the administration, for example providing better communication facilities and upgrading the non-industrial sectors and monitoring the pattern of expenditures along with the usage of resources

  • To evaluate the resources provided to the states to raise their revenues and this is based on the tax income of the states

  • The efforts made by the states in terms of various tax issues

  • To check the tax returns on various investments done by the states to enhance the industrial sector

  • To look for better opportunities to ensure an improved financial system in the states

Important members of the Tenth Finance Commission

Chairman - K.C. Pant

Other important members-
Dr. Debi Prosad Pal, MP
Shri B.P.R. Vithal
Dr. C. Rangarajan (Resigned 21st December, 1992)
Shri M.C. Gupta relinquished charge on 31st January 1994.
Shri Manu R. Shroff (In place of Dr. C. Rangarajan on 14th October, 1993)
Shri Arun Sinha, Member Secretary (In place of Shri M.C. Gupta) on 1st March 1994

Highlights of the Tenth Finance Commission
  • Division of Union Duties of Excise
  • Assessment of the usage of resources by the states
  • Additions Excise Duties on various commodities
  • Financing of Relief Expenditure for various states
  • Grants-in-aid in various states to raise the revenues of the same
  • Summary of Recommendations
  • Grant in Lieu of Sales Tax on Railway Passenger Fares
  • Upgrading the Standards of Administration
  • Evaluation of the resources provided by the Central Government for enlistment of the states
  • Estate Duty in Respect of Property excluding Agricultural Land
  • Income-Tax