Home The Constitution Part IX Article 243-I

Art. 243-I Part IX: The Panchayats

Constitution of Finance Commission to Review Financial Position

Exact text — Constitution of India

(1) The Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor as to—(a) the principles which should govern the distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State...; (b) the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by, the Panchayats; (c) the grants-in-aid to the Panchayats from the Consolidated Fund of the State...

In Plain English

What this Article actually means

This Article requires every state to set up a State Finance Commission every 5 years, specifically to review Panchayats' financial health and recommend how tax revenue should be shared between the state and its Panchayats — a periodic, structured review process rather than a one-time or ad-hoc arrangement.

Why This Matters To You

How it shows up in everyday life

This is the institutional mechanism ensuring Panchayat funding isn't just decided once and forgotten — every 5 years, a dedicated Commission is supposed to reassess whether the revenue-sharing arrangement is working and recommend adjustments.

Read alongside this one

Art. 243h — Powers to Impose Taxes by Panchayats Art. 280 — Finance Commission

Frequently Asked

Quick answers about Article 243-I

Is this the same as the (national) Finance Commission under Article 280?

No — this is a separate, STATE-level Finance Commission specifically focused on Union-State-Panchayat/Municipality revenue relationships within that state, distinct from the national Finance Commission that reviews Union-State revenue sharing.

← PreviousArticle 243H: Powers to Impose Taxes by, and Funds of, the Panchayats Next →Article 243J: Audit of Accounts of Panchayats

The text above reproduces Article 243-I of the Constitution of India as amended to date, for general educational reference. It is public-domain legislative text, but we recommend cross-checking the authoritative version at legislative.gov.in or india.gov.in before relying on it for a legal matter. The explanation, examples and FAQs are general information, not legal advice — consult a qualified advocate for guidance on your specific situation.