The panel will submit its report in two years and the recommendations would be implemented from Jan 1, 2016, a finance ministry statement said.
Prime Minister Manmohan Singh has approved the composition of the Commission.
Prime Minister Manmohan Singh has approved the composition of the Commission that has one full-time and one part-time member, besides the chairman, the statement added.
Petroleum and Natural Gas Secretary Vivek Rae has been appointed a full-time member, while National Institute of Public Finance and Policy director Rathin Roy is a part- time member.
Meena Agarwal, an officer on special duty in the finance ministry's expenditure department, has been appointed the Commission's secretary.