gs1medium

Which one of the following authorities makes recommendation to the Governor of a State as to the principles for determining the taxes and duties which may be appropriated by the Panchayats in that particular State?

  1. A.District Planning Committees
  2. B.State Finance Commission
  3. C.Finance Ministry of that State
  4. D.Panchayati Raj Ministry of that State
▶ Answer & Explanation

Correct answer: B. State Finance Commission

Article 243-I of the Constitution mandates the establishment of a State Finance Commission every five years. This commission is responsible for reviewing the financial position of Panchayats and Municipalities and recommending to the Governor the principles for distributing the net proceeds of taxes, duties, tolls, and fees levied and collected by the state government which may be assigned to or shared between the state and the local bodies. It also suggests measures to improve their financial health.

Source: UPSC gs1 2010

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