(1)The Government shall as soon as may be from the commencement of this Act and thereafter on the expiration of every fifth year constitute a Finance Commission to review the financial position of the Zila Parishads, Panchayat Samitis and Gram Panchayats and to make recommendations to the Government with regard to-(a)the principles which should govern(i)the distribution between the State and the Zila Parishads, Panchayat Samitis and Gram Panchayats of the net proceeds of the taxes, duties and fees livable by the Government which may be divided between them and allocation between the Zila Parishads, Panchayat Samitis and Gram Panchayats of their respective shares of such proceeds;(ii)the determination of the taxes, duties and fees which may be assigned to or appropriated by the Zila Parishads, Panchayat Samitis and Gram Panchayats-,(iii)the grants-in-aid to Zila Parishads, Panchayat Samitis and Gram Panchayats from the Consolidated Fund of the State;(b)the measures needed to improve the financial position of the Zila Parishad, Panchayat Samitis and Gram Panchayats;(c)any other matter referred to the Finance Commission by the Governor in the interest of sound finance of the Zila Parishads, Panchayat Samitis and Gram Panchayat.(2)The Finance Commission shall consist of a Chairman and two other members.(3)The Chairman and members of the Finance Commission shall possess such qualification and shall be appointed in such manner as may be prescribed.(4)The Finance Commission shall determine its own 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 his 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 to produce records; and(c)such other powers as may be prescribed.(8)The Government 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.
