Finance Commission Division

Under Article 280 of the Constitution, a Finance Commission is to be constituted every fifth year or at such earlier time as the President considers necessary to make recommendations to the President as to :

(i) the distribution between the Union and the states of the net proceeds of taxes which are to be, or may be, divided between them and the allocation between the states of the respective share of such proceeds;

(ii) the principles which should govern the grants-in-aid of the revenues of the states in need of such assistance out of the Consolidated Fund of India;

(iii) the measures needed to augment the Consolidated Fund of a state to supplement the resources of the Panchayats in the state on the basis of the recommendations made by the Finance Commission of the state;

(iv) the measures needed to augment the Consolidated Fund of a state to supplement the resources of the Municipalities in the State on the basis of the recommendations made by the Finance Commission of the states; and

(v) any other matter referred to the Commission by the President in the interest of sound finance. The recommendations of the Commission together with an explanatory memorandum as to the action taken thereon are laid before each House of Parliament. Since the commencement of the Constitution 12 Finance Commissions have been constituted.