Article 243I of Constitution of India – Constitution of Finance Commission to review financial position
Article 243I of Constitution of India deals with Constitution of Finance Commission to review financial position
Original Text of Article 243I of Constitution of India
(1) The Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor as to—
(a) the principles which should govern—
(i) the distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them under this Part and the allocation between the Panchayats at all levels of their respective shares of such proceeds. the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by, the Panchayats;
(iii) the grants-in-aid to the Panchayats from the Consolidated Fund of the State;
(b) the measures needed to improve the financial position of the Panchayats;
(c) any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Panchayats.
(2) The Legislature of a State may, by law, provide for the composition of the Commission, the qualifications which shall be requisite for appointment as members thereof and the manner in which they shall be selected.
(3) The Commission shall determine their procedure and shall have such powers in the performance of their functions as the Legislature of the State may, by law, confer on them.
(4) The Governor shall cause every recommendation made by the Commission under this article together with an explanatory memorandum as to the action taken thereon to be laid before the Legislature of the State.
Questions related to Article 243I of Constitution of India
Article 243I requires the Governor of each state to constitute a Finance Commission within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and subsequently every five years. This commission reviews the financial position of Panchayats and makes recommendations on the distribution of taxes, duties, tolls, fees, grants-in-aid, and measures to improve their financial health.
The Finance Commission examines the net proceeds of taxes, duties, tolls, and fees levied by the state, evaluates the allocation of these revenues between the state and Panchayats, and determines which taxes can be assigned to or appropriated by Panchayats. It also assesses the grants-in-aid from the state’s Consolidated Fund and suggests measures to enhance the financial stability of Panchayats.
The Finance Commission’s role includes making recommendations on the principles governing the distribution of tax revenues between the state and Panchayats, determining taxes assigned to Panchayats, suggesting grants-in-aid from the state’s Consolidated Fund, proposing measures to improve Panchayats’ financial positions, and addressing any other matters referred by the Governor concerning Panchayats’ financial health.
The full text of Article 243I is available on the Constitution of India website. For legal interpretations and case law, you can refer to Indian Kanoon.
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