The advisory council's mandate includes broadening the Commission's ambit by integrating national and international best practices on fiscal devolution and enhancing the quality, reach, and enforcement of its recommendations. The council will also provide advice on any of the ToR or related subjects of relevance, assist in the preparation of research papers, and monitor or assess studies commissioned by the Finance Commission to deepen its understanding of relevant issues.

The announcement of Rajadhyaksha's resignation comes in the wake of the commission's inaugural meeting held on February 14 in New Delhi, where all members were present. In a statement following the meeting, the commission highlighted the necessity for extensive consultations with various stakeholders, including states, local bodies, ministries, and experts.

The Terms of Reference, approved by the cabinet comprises of pivotal aspects such as the equitable distribution of net tax proceeds between the Union and states, the allocation of respective shares among states and the guiding principles governing grants-in-aid from the Consolidated Fund of India to states.