Finance Commission

Under Article 280 of the Constitution, the President is required to appoint a new Finance Commission every five years. The composition of the Commission consists of a Chairman and four members. The Parliament determines their qualifications and the method of selection. The Chairman and members of the Finance Commission are appointed by the President of India. The Chairman and members can be reappointed after the completion of their term. The qualifications of the Chairman of the Finance Commission are determined by Parliament based on work experience in public affairs. The 16th Finance Commission was constituted in 2023 to make recommendations for a period of five years from 1 April 2026 to 31 March 2031. The State Finance Commission functions at the state level. It is a constitutional body. The State Finance Commission was formed under the 73rd Amendment to the Constitution, which came into force in 1992.

Qualifications of Members of the Finance Commission

■ A High Court Judge or a person qualified to be a High Court Judge.

■ A person with special knowledge of financial matters and financial matters related to the government.

■ A person with experience in public administration and financial matters.

■ A person with special knowledge of economics.

Main duties of the Finance Commission

The Finance Commission reports to the President. The President submits the said report to the Parliament. The recommendations made by the Finance Commission are in the form of advice. The Central Government is not obliged to follow the said recommendations. The subjects on which the Finance Commission makes recommendations to the President,

■ Matters relating to the distribution of taxes between the Centre and the States.

■ Matters relating to the basic principles of grants-in-aid to the States by the Centre.

■ Matters relating to the basic principles of the share to be given to the Panchayats and Municipalities from the State Consolidated Fund by the State Finance Commission.

■ Directions for the implementation of the matters given by the President from time to time on financial matters.

UPSC/PSC Questions

1. Which article of the Constitution deals with the Finance Commission - Article 280

2. Term of the Finance Commission - Five years

3. Appointment of the Central Finance Commission - President

4. Number of members of the Central Finance Commission - Five (one chairman and four members)

5. Submission of report to the President on the sharing of taxes between the Centre and the States - Finance Commission

6. Recommendations for the allocation of funds to the States from the amounts credited to the Consolidated Fund of India - Finance Commission

7. Article of the Constitution dealing with the Consolidated Funds of the Central Government and the State Governments - 266

8. First Finance Commission constituted - 1951

9. Chairman of the First Finance Commission - K.C. Niyogi (1952 - 57)

10. Second Finance Commission Chairman of the Commission - K. Santhanam

11. Chairman of the Fourteenth Finance Commission - Y.V. Reddy (2015 - 2020)

12. Chairman of the Fifteenth Finance Commission - Nanda Kishore Singh (2020-21; 2021-26)

13. Chairman of the 16th Central Finance Commission - Arvind Panagariya (2026 - 31)

14. First Malayali to be a member of the Central Finance Commission - V.P. Menon (1st Finance Commission)

15. First Malayali to hold the post of Member Secretary in the Central Finance Commission - P.C. Mathew (4th Finance Commission)

16. When did Finance Commissions come into existence in Indian states - 1993

17. Based on the Constitution of India and the Panchayati Raj Act, the State Finance Commission reviews the financial condition of the local self-government bodies and submits recommendations to the Governor - State Finance Commission

18. Appointment of the State Finance Commission - Governor (Article 243 I)

19. Number of members of the State Finance Commission - Maximum four members including a Chairperson

20. In the state The report on taxes, tolls, grants etc. to be paid to the local self-government bodies from the State Finance Commission is submitted to the Governor by - State Finance Commission

21. Term of the State Finance Commission - Five years

22. Chairman of the first Kerala State Finance Commission - P.M. Abraham

23. Which category of constitutional institution does the Finance Commission belong to - Semi-judicial system

24. Headquarters of the Finance Commission - Jawahar Vyapaar Bhavan, Tolstoy Marg, New Delhi

25. Article that talks about the recommendations of the Finance Commission - 281