Home The Constitution Part XII Article 280

Art. 280 Part XII: Finance, Property, Contracts and Suits

Finance Commission

Exact text — Constitution of India

(1) The President shall, within two years from the commencement of this Constitution and thereafter at the expiration of every fifth year or at such earlier time as the President considers necessary, by order constitute a Finance Commission... (3) It shall be the duty of the Commission to make recommendations to the President as to—(a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them... and the allocation between the States of the respective shares of such proceeds; (b) the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India; (bb) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the State...; (c) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State...; (d) any other matter referred to the Commission by the President in the interests of sound finance.

In Plain English

What this Article actually means

This Article establishes the Finance Commission — appointed every 5 years — as India's central mechanism for recommending how tax revenue should be divided between the Union and the states, and (since later amendments) how states should support their own Panchayats and Municipalities financially. Its periodic recommendations shape a massive share of intergovernmental fiscal transfers across the country.

Why This Matters To You

How it shows up in everyday life

Every 5 years, the Finance Commission's report becomes a major, closely-watched event in Indian fiscal policy — its recommended tax-devolution percentage (like the 15th Finance Commission's 41%) directly determines how much of centrally-collected tax revenue flows to state governments to fund everything from healthcare to infrastructure.

Read alongside this one

Art. 270 — Taxes Levied and Distributed Between the Union and the States Art. 243-i — State Finance Commission

Frequently Asked

Quick answers about Article 280

Is the Finance Commission the same as the GST Council?

No — they're distinct bodies with different roles: the Finance Commission (this Article) recommends overall tax-revenue sharing between Union and states across a 5-year cycle, while the GST Council (Article 279A) makes ongoing, more frequent recommendations specifically on GST rates and rules.

← PreviousArticle 279A: Goods and Services Tax Council Next →Article 281: Recommendations of the Finance Commission

The text above reproduces Article 280 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.