Study today:
🔆Finance Commission
✅Finance Commission is a constitutional body.
✅ It was established under Article 280 for the purpose of allocation of certain revenue resources between the Union and the State Governments.
✅President of India constitutes the Finance Commission every five years or on time considered necessary by him.
✅The commission submits its report to the President. He lays it both the houses of the parliament along with an explanatory memorandum as to the action taken on its recommendations.
✅The recommendations made by the Finance Commission are of an advisory nature only and therefore, not binding upon the government. It is up to the Government to implement its recommendations on granting money to the states.
✅The Fifteenth Finance Commission (XV-FC) was constituted in November 2017 under chairmanship of NK Singh to give recommendations for vertical and horizontal devolution of taxes for five fiscal years, commencing 1 April 2020.
✅ The 15th Finance Commission used the following criteria while determining the share of states:
(i) 45% for the income distance,
(ii) 15% for the population in 2011,
(iii) 15% for the area,
(iv) 10% for forest and ecology, (v) 12.5% for demographic performance, and
(vi) 2.5% for tax effort.
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