New Delhi: The Cabinet on Wednesday approved the setting up of the 15th Finance Commission which will assess the tax resources of the nation and suggest a formula for their devolution among states.


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The members of the Commission and its terms of reference will be notified in the due course of time, Finance Minister Arun Jaitley said after the Union Cabinet meeting.


Its recommendations will have to be in place before April 1, 2020, he said. "Normally, it takes 2 years for Finance Commission to give its recommendations."


As per Article 280 of the Constitution, the Commission is required to make recommendations on the distribution of the net proceeds of taxes between the Centre and the states.


The Commission also suggests the principles which should govern the grants in aid of the revenues of the states out of the Consolidated Fund of India.


This time it will have to take into account the impact of the Goods and Services Tax, which kicked in from July, on the resources of the central as well state governments.


On who will head the 15th Finance Commission, Jaitley said: "The members of Finance Commission will appointed very very soon."


When asked whether the 15th Commission will also allocate more resources to the states, he said: "I think let us not pre judge the situation. India is a Union of states, the Union also has to survive."


The 14th Finance Commission was set up on January 2, 2013. Its recommendations cover the period from April 1, 2015 to March 31, 2020.