(1)The Government shall as soon as may be within one year from the date of commencement of this Act and thereafter at the expiration of every fifth year constitute a Finance Commission to review the financial position of the Zilla Panchayats, Taluk Panchayats and Grama Panchayats and to make recommendation to the Government as to,-(a)the principles which should govern,-(i)the distribution between the State and the Zilla Panchayats, Taluk Panchayats and Grama Panchayats and the net proceeds of the taxes, duties, tolls and fees leviable by the Government which may be divided between them and allocation between the Zilla Panchayats, Taluk Panchayats and Grama Panchayats of their respective shares of such proceeds;(ii)the determination of the taxes, duties, tolls and fees which may be assigned to or appropriated by the Zilla Panchayats , Taluk Panchayats and Grama Panchayats;(iii)the grants-in-aid to the Zilla Panchayats, Taluk Panchayats and Grama Panchayats from the Consolidated Fund of the State;(b)the measures needed to improve the financial position of the Zilla Panchayats, Taluk Panchayats and Grama Panchayats;(c)any other matter referred to the Finance Commission by the Governor in the interest of sound finance of the Zilla Panchayats, Taluk Panchayats and Grama Panchayats.(2)Finance Commission shall consist of a Chairman and two other members.(3)The Chairman and members of Finance Commission shall possess such qualification and shall be appointed in such manner as may be prescribed.(4)The Finance Commission shall determine its procedure.(5)The Chairman or a member of the Finance Commission may resign his office by writing under his hand and addressed to the Finance Secretary to the Government, but he shall continue in office until his resignation is accepted by the Government.(6)The casual vacancy created by the resignation of the member or Chairman under sub-section (5) or for any other reason may be filled by fresh appointment and a member or Chairman so appointed shall hold office for the remaining period for which the member or Chairman in whose place he was appointed would have held office.(7)The Commission shall have the following powers in the performance of its functions namely:-(a)to call for any record from any officer or authority;(b)to summon any person to give evidence or produce records; and(c)such other power as may be prescribed.(8)The Governor shall cause every recommendation made by the Finance Commission under this section together with an explanatory memorandum as to the action taken thereon to be laid before both the Houses of the State Legislature.
