Distribution of Revenues between the Union and the States
280. Finance Commission.-
(1) The President shall, within two years
from the commencement of this Constitution and thereafter at the
expiration of every fifth year or at such earlier time as the
President considers necessary, by order constitute a Finance
Commission which shall consist of a Chairman and four other members to
be appointed by the President.
(2) Parliament may by law determine the qualifications which shall be
requisite for appointment as members of the Commission and the manner
in which they shall be selected.
(3) It shall be the duty of the Commission to make recommendations to
the President as to-
(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;
_236[(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
_237[(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
_238[(d)] any other matter referred to the Commission by the President
in the interests of sound finance.
(4) The Commission shall determine their procedure and shall have such
powers in the performance of their functions as Parliament may by law
confer on them.