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

1. To allow the withdrawal of the money out of the Consolidated Fund of India.

2. To allocate among 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?

Correct option is B

According to Article 280(3) of the Constitution, the main functions of the Finance Commission is –

• (1) To recommend the distribution of the net proceeds of taxes between the Union and the States.

• (2) To determine the principles which should govern the grants in aid of the revenues to the States out of the Consolidated Fund of India.

• (3) To suggest the necessary measures to increase the Consolidated Fund of the State for the development of Local bodies in the state on the basis of recommendation made by the finance commission.