New Delhi: An expert group comprising representatives from various ministries will be set up by the 15th Finance Commission to work out the modalities on the demand of Defence Ministry for non-lapsable funds for the acquisition and levying of “defence cess” to finance security expenditure.

The Finance Commission’s report was tabled in Parliament on February 1 at the same time as Finance Minister Nirmala Sitharaman presented the Union Budget, which increased the defence budget allocation to Rs 4.71 lakh crore from the earlier Rs 4.3 lakh crore.

For modernisation and buying new weapon systems, defence forces have been allocated Rs 1,10,734 crore which is Rs 10,340 crore more than what was provided in last year’s budget.

The biggest hike in allocation for defence forces came in the defence pension as the budget for pensions went up to Rs 1.33 lakh crore from last year’s Rs 1.17 lakh crore.

The hike in defence pension budget is more than the hike given in revenue and capital funds for defence.