Article 280: what India’s Finance Commission does
Article 280 of the Constitution provides for a Finance Commission to recommend tax devolution and grants-in-aid between the Union and states, among related fiscal matters.
Article 280 of the Constitution of India provides for a Finance Commission. It recommends how the net proceeds of certain taxes should be distributed between the Union and states, principles governing grants-in-aid and measures to augment state resources for local bodies under the constitutional framework.
The core functions
The Finance Commission’s recommendations concern fiscal relations between the Union and states. The commission addresses tax devolution and grants-in-aid and may recommend measures to augment state funds for panchayats and municipalities, based on recommendations of the relevant State Finance Commission.
The President constitutes a Finance Commission at the constitutionally prescribed interval, ordinarily every five years or earlier if necessary. The exact terms of reference vary by commission, so a static definition should not be used as a substitute for the current commission’s report.
How to remember it
For exam revision, connect Article 280 with the Finance Commission and fiscal federalism. Do not confuse it with the GST Council, which is established under a different constitutional provision and has a different role.
For current figures or recommendations, consult the latest official commission report rather than memorising an old headline.
Editorial note
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Frequently asked questions
Which constitutional article provides for the Finance Commission?
Article 280.