Previous Year Question
The primary duty of the Finance Commission of India is
To give the recommendations on distribution of tax revenue between the Union and States
To prepare the Union Annual Budget
To advise the President on financial matters
To allocate funds to various Ministries/Departments of the Union and State Governments
Correct Answer: A
Detailed Solution
Under Article 280 of the Constitution, the President normally constitutes a Finance Commission at the expiration of every five years, or earlier if considered necessary. It consists of a Chairman and four other Members.
The principal constitutional function of the Finance Commission is to recommend to the President the distribution of the net proceeds of taxes between the Union and the States and the allocation among the States of their respective shares. This is the primary duty referred to in the question.
The Commission also recommends the principles governing grants-in-aid to the States and measures for augmenting State Consolidated Funds to supplement the resources of Panchayats and Municipalities.
The Finance Commission does not prepare the Union Budget, nor is it an executive agency that directly allocates funds among Ministries. Likewise, giving general advice to the President on every financial matter is not its primary constitutional function; its functions are specifically prescribed under Article 280.
Thus, the key examination association is—Article 280 → Finance Commission → Union-State tax distribution + grants-in-aid recommendations.