Q. Which of the following are the functions of the Finance Commission?
1. It ascertains and certifies the net proceeds of any tax of the Union Government.
2. It provides for the horizontal and vertical distribution of the net proceeds of taxes between Centre and the states.
3. It not only gives the recommendations but also executes them to the best of practice.
4. It plays a role in the augmentation of the resources of the Panchayati Raj Institutions.
How many statements given above are correct?
Exp) Option b is the correct answer
The Constitution of India, under Article 280, provides for a Finance Commission as a quasi-judicial body. It is constituted by the President of India every fifth year or at such earlier time as he considers necessary.
Statement 1 is incorrect – This is a function of the Comptroller and Auditor General of India. According to article 279 of the Constitution of India, it is the duty of the Comptroller and Auditor General of India to ascertain and certify the net proceeds of any tax or duty.
Statement 2 is correct – The Finance Commission is required to make recommendations to the President of India regarding the distribution of the net proceeds of taxes to be shared between the Centre and the states, and the allocation between the states of the respective shares of such proceeds. It also provides for the principles that should govern the grants-in-aid to the states by the Centre (i.e., out of the Consolidated Fund of India).
Statement 3 is incorrect – The recommendations made by the Finance Commission are only of advisory nature and hence, not binding on the government. It is up to the Union government to implement its recommendations on granting money to the states. The commission has no executive functions.
Statement 4 is correct – Finance commission also provides for the measures needed to augment the consolidated fund of a state to supplement the resources of the panchayats and the municipalities in the state based on the recommendations made by the state finance commission.
