Q. Which one is the primary function of the Finance Commission in India?
Answer: Distribute revenue between the Centre and the States
Notes: The following are the main functions of the Finance Commission of India:
1. The finance commission is responsible for the distribution of net proceeds of taxes between Center and the States. This distribution is made on the basis of the respective contributions of the States to the taxes. The greater the tax paid by a State, the greater is the share from the net proceeds of taxes.
2. It determines the factors governing grants that are made to the states in the form of aids to the states and it also fixes the amount that is given in the form of aid by the center to the state governments.
3. The Commission is responsible to make recommendations to the president as to the measures that are needed to augment the Fund of a State to supplement the resources of the Panchayats and Municipalities.

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