The necessity for the Finance Commission was first expressed by British for guiding the finance of India. The structure of the modern Act was laid in the early 1920's.
The Finance Commission functions to define the financial relations between the center and the state. The Finance Commission Act of 1951 tells about the eligibility criteria of the Finance Commission.
Functions of the Finance Commission
The Finance Commission's duty is to recommend the President for:-- The distribution of net proceeds of taxes between the Union and the States.
- To evaluate the increase in the Consolidated Fund of a state to affix the resources of the Panchayat in the state.
- To evaluate the increase in the Consolidated Fund of a state to affix the resources of the Municipalities in the state.
Powers of the Finance Commission
The Finance Commission has the following powers:-- The Commission shall have all the powers of the Civil Court as per the Code of Civil Procedure, 1908.
- It can call any witness, or can ask for the production of any public record or document from any court or office.
- It can ask any person to give information or document on matters as it may feel to be useful or relevant. It can function as a civil court in discharging its duties.
