Q. Consider the following:

1. Allotting of the shares of net proceeds of taxes
2. Laying down principles governing grants in aid
3. Looking into the financial relations between the central government and the state Governments

The above mentioned functions are carried out by which among the following?
Answer: Finance Commission
Notes: The correct answer is the Finance Commission. The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. Its primary role is to recommend the distribution of tax revenues between the central and state governments, ensuring fiscal federalism. It also lays down principles for grants-in-aid to states, addressing financial relations between different levels of government. The Finance Commission is constituted every five years, and its recommendations are crucial for maintaining balanced economic development across states.