Fifteenth Finance Commission Report -2020-21

The Fifteenth Finance Commission (FC), in its report for fiscal year 2020-21, has recommended a marginal reduction in the vertical devolution of the divisible tax pool to 41 per cent from the prevailing 42 per cent. This is due to the newly formed Union Territories of Jammu and Kashmir, and Ladakh, which will get funds from the Centre’s share, which means devolution will be for 28 states compared to 29 earlier. The FC also reintroduced performance-based incentives to states on two parameters — demographic performance and taxation efforts — and said it would recommend more incentives on further parameters, conditional upon states fulfilling certain criteria in the coming fiscal year.

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