It is a constitutional body set up under the Article 280 to suggest measures and methods on how the net proceeds of taxes to be shared between the Centre and the States.Functions [Courtesy: http://indiacode.nic.in/]
(a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds;
(b) the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India;
[(bb) 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;]
[(c) 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 State;]
[(d)] any other matter referred to the Commission by the President in the interests of sound finance.
Important Facts to Remember
- Finance Commission was formed under the Article 280 of the Indian constitution.
- It was formed on November 22, 1951.
- Head Quarters: New Delhi
- Chairman + 4 Other members
- The Chairman and the other members of the Finance Commission will be appointed by the President.
- They are also eligible for reappointment of the post.
- The finance commission submits its report the President, who then lays down in the Parliament.
- The recommendations of the finance commission to the govt will be advisory in nature and hence not binding.
- So far Fourteen finance Commission has been formed, the chairman of the
- First Finance Commission - K C Neogy
- Thirteenth Finance commission - Dr Vijay Kelkar
- Fourteenth Finance commission - Y V Reddy[Very Important]