The Tenth Finance Commission

The Tenth Finance Commission of India was incorporated in the year 1995 consisting of Shri Krishna Chandra Pant as the Chairman and the following four other Members, namely,

• Dr. Debi Prasad Pal, Member of Parliament, Member
• Shri B.P.R. Vithal, Member
• Dr. C. Rangarajan, Member
• Shri M.C. Gupta, Member Secretary

Recommendations

• The share of the Union Territories would not be determined on the grounds used for state share but it would be decided on the basis of population solely. The percentage would be 0.927% for the years 1995-2000.
• Out of the total income obtained from certain central taxes and duties, 29% should go to the states. This is known as the 'Alternative Scheme of Devolution' and came into effect retrospectively from April 1, 1996.
• The proceeds from the ‘penalties’ and ‘interest recovered’ under the miscellaneous receipts should be included in to the divisible income tax pool as recommended by Ninth commission with effect from 1 April 1995.
• The share of the net proceeds would be 77.5% for five years.
• The commission dropped the collection factor as the criterion for distribution
• The distribution of the net proceeds among states would be as follows:-
  • § 20% on the basis of population of 1971
  • § 60% on basis of distance of per capita income
  • § 5% on basis of area adjusted
  • § 5% on basis of infrastructure index
  • § 10% on basis of tax effort

Notes

• Centre State Financial Relations in India and Finance Commission by Sansar Singh Janjua

External links

• Finance Commission of India