UPSC Prelims PYQ 2003: Functions of the Finance Commission — which are...

Consider the following statements: The function(s) of the Finance Commission is/are

1. To allow the withdrawal of money out of the Consolidated Fund of India.
2. To allocate between the States the shares of proceeds of taxes.
3. To consider applications for grants‑in‑aid from States.
4. To supervise and report on whether the Union and State governments are levying taxes in accordance with the budgetary provisions.

Which of these statements is/are correct?

1. Only 1
2. 2 and 3
3. 3 and 4
4. 1, 2 and 4

Explanation

Option (b) is correct

• The Finance Commission of India is responsible for recommending the distribution of tax revenues between the Union and the States and among the States themselves, as well as considering grants-in-aid to States under Article 280 of the Constitution. However, withdrawal of money from the Consolidated Fund of India is not its function, and it does not supervise whether governments are levying taxes according to budgetary provisions.

Answer: (b) 2 and 3