The Finance Commission is a constitutional body, that determines the method and formula for distributing the tax proceeds between the Centre and states, and among the states as per the constitutional arrangement and present requirements.
What is Finance Commission and its functions?
The constitution-makers were aware of the financial requirements of the Centre and the states. They devised an elaborate method, clearly demarcating the duties and responsibilities of the units of the Union and of the Union itself while allocating resources to perform those duties. To meet these requirements, the Finance Commission came into being.
Is Finance Commission a constitutional body?
Under Article 280 of the Constitution, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.