The Finance Commission decides upon the financial relations between the union and state governments.

Facts to know ( Please look into the recommendations of sixteenth finance commission for the prelims exam)

• It is formed under Article 280 of the Constitution.
• The first commission was formed in 1951.
• Finance Commission looks into vertical and horizontal fiscal imbalances existing between centre and state governments.
• Presently, the 16^th Finance Commission has been formed since 2023.
• The finance commission will consist of a chairperson and four other members.
• The finance commission will be constituted every five years.
• The Finance Commission shall decide the net distribution of taxes between the centre and the state.
• The commission shall also look into the devolution of funds and strengthening of finance of the panchayats and municipalities.
• The first finance commission was headed by K.C Neogy, while the sixteenth finance commission is headed by Aravind Panagariya.

Source: The Indian Express

Source: The Indian Express