Finance Commission


 
 
Concept Explanation
 

Finance Commission

The Finance Commission:  The Constitution of India provides for the establishment of a Finance Commission for the purpose of allocation of certain resuorces of revencue between the Union and the State Governments. The Finance Commission is established under Article 280 of the constitution of India by the President.

  • The qualifications, powers and procedures of the commission itselgf are regulated by  the Finance Commission (Miscellanous Provisions) Act 1951. Such Commissions are deemed to be civil courts for the purposes of the cCode of Criminal Procedure 1898.
  • The finance Commission is constituted to define financial relations between the Centre and the States. Under the provision of Article 280 of the COnstitution, the President appoints a Finance Commission for the specific purpose of devolution of non-plan revenue resources.
  • Functions:  Under Article 280 of the Constitution, the Finance Commission is required to make recommendations to the President in respect of the following:

  •  The distribution of net proceeds of taxes to be shared between the Centre and the States, and the allocation between the states, the respective share of such proceeds
  • The principles which should govern the grants-in-aid by the Centre to States out of the Consolidated Fund of India.
  • The measures needed to augment the consolidated fund of a state to supplement the resources of the Panchayats and the Municipalities in the state on the basis of the recommendations made by the State Finance Commission.
  • Any other matter referred to it by the President in the interests of sound finance.
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