The Eighth Finance Commission of India was constituted by the

President of India The president of India (ISO 15919, ISO: ) is the head of state of the Republic of India. The president is the nominal head of the executive, the first citizen of the country, and the commander-in-chief, supreme commander of the Indian Armed ...

, on 28 April 1984 under the chairmanship of Shri Y.B. Chavan.

Members

The commission consisted of the following members: * Shri Y.B. Chavan, Chairman * Shri Justice Sabya Sachi Mukherjee, resigned during the term of the Commission * Dr. C. H. Hanumantha Rao * Shri G.C. Baveja * Shri A.R. Shirali * Shri Justice T.P.S. Chawla, in place of Sabya Sachi Mukherjee * Shri N.V. Krishnan, Secretary

Terms of Reference

The commission was asked to make recommendations on * The distribution of net proceeds of taxes between the union and the

states State most commonly refers to: * State (polity), a centralized political organization that regulates law and society within a territory **Sovereign state, a sovereign polity in international law, commonly referred to as a country **Nation state, a ...

which are to be or may be divided between them under chapter 1 of Part XII of the

Constitution A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organization or other type of entity, and commonly determines how that entity is to be governed. When these pri ...

and allocation between the states of the respective shares of the same * The principles which govern the grants in aid of the revenues of the states out of the Consolidated Fund of India and the amount to be paid to the needy States which seek assistance by way of grants in aid of their revenues under Article 275 of the Constitution for purposes other than those specified in the provisions to clause (i) of that article The commission is to examine the possibility for increasing revenue from the taxes and duties mentioned in Article 269 of the constitution but which are not levied at present. It will probe into the scope for enhancing revenue from the duties mentioned in the Article 268. Making an assessment of the non plan capital gap of the states on a uniform and comparable basis for the 5 years ending with 1988-89 also comes under its agenda. It will review the policy and arrangement in regards to the financing of relief expenditure by the States affected by natural calamities and make appropriate suggestions. The commission shall make its report by 31 October 1986 on each of the matters aforesaid. The major objective of the Eighth Finance Commission was to reduce interstate disparities through their scheme of

devolution Devolution is the statutory delegation of powers from the central government of a sovereign state to govern at a subnational level, such as a regional or local level. It is a form of administrative decentralization. Devolved territori ...

Recommendations

* Sharing of

Income Tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

– To retain the share of the States in the proceeds of the income tax at 85% level. Withdrawal of surcharge on income tax from the financial year 1985-86 is also recommended * Union

Excise Duties file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the Bunghole, bung of the beer barrel so when ...

– Recommended its increase from 40% to 45%. It made a beginning by using one unified formula to distribute the net yield from Union Excise Duties and 90% share of the

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

* Additional

– The distribution from the net yield from additional duties of the excise was made 50% on the basis of the share of each state in the average state domestic products of all the states for the years from 1976–1977 to 1978-1979 and 50% on the basis of the population figures as given in 1971

Census A census (from Latin ''censere'', 'to assess') is the procedure of systematically acquiring, recording, and calculating population information about the members of a given Statistical population, population, usually displayed in the form of stati ...

* Grants in Lieu of tax on railway passenger fare – It has boldly defended the case of the state government in regard to their claim on the tax on railway fair. The compensatory grant which replaced the tax was increased to Rs. 95

crores Crore (; abbreviated cr) denotes the quantity ten million (107) and is equal to 100 lakh in the Indian numbering system. In many international contexts, the decimal quantity is formatted as 10,000,000, but when used in the context of the Indian ...

* Grants in Aid – They have been made more flexible. The commission has provided for an annual growth of 5% in respect of the amount of grants payable in nature of the forecast period commencing from 1984 to 1985 * The recommendation to write off a substantial portion of loan amounting to Rs. 2285.39

is an appropriate step towards strengthening the state finances

References

Further References

* * {{DEFAULTSORT:Eighth Finance Commission Finance Commission of India 1984 establishments in India