15th Finance Commission to commission study on cess collections of Centre


  • The 15th Finance Commission will commission legal studies on the cesses and surcharge levied by the central government but from which no share is devolved to the states.
  • The Finance Commission recommends a ratio in which the tax money collected by the central government is to be divided among the states every five years.
  • It has begun work and will submit its report by October 2019.
  • In the pre-GST era, collections from direct taxes like income tax and corporate tax and indirect taxes including excise duty and service tax were divided between the centre and the state in a ratio recommended by the Constitutionally-mandated Finance Commission.
  • Goods and Services Tax (GST) was rolled out from July 1 last year subsuming excise duty and service tax along with other central and state levies.
  • The 15th Finance Commission is headed by N K Singh will suggest what will be states’ share in direct tax and GST collected by the centre. 
  • In both scenarios, cesses and surcharge levied by the Centre are not included in the divisible pool.
  • The 15th Finance Commission will get "some legal studies" done on the entire cess and surcharges.
  • The previous 14th Finance Commission had raised the share of states in centre’s tax revenue to a record 42 % for five year period starting 2015-16, up from previous 32 %.