Consider the following statements: The State government shall appoint a fincance commission to review the financial position of the Panchayats and to make recommendations as to 1. the distribution between the State and Panchayats of the net proceeds of taxes, tolls and fees leviable by the states. 2. the determinates of the taxes duteis, tolls and fees which may be assigned to the panchayats. 3. the principles that will determine grant-in- aid to the Panchayats. Which of the statement(s) given above is/are correct?

Under Article 243-I of the Constitution, the Governor of a State appoints a State Finance Commission (SFC) every five years to review the financial position of Panchayats [3]. The SFC is mandated to make recommendations regarding: (1) the distribution between the State and the Panchayats of the net proceeds of taxes, duties, tolls, and fees leviable by the State [2]; (2) the determination of taxes, duties, tolls, and fees which may be assigned to or appropriated by the Panchayats [3]; and (3) the principles governing the grants-in-aid to the Panchayats from the Consolidated Fund of the State [3]. Additionally, the SFC recommends measures to improve the financial position of these local bodies . Since all three statements accurately reflect the constitutional duties of the State Finance Commission as outlined in the 73rd Amendment, the correct option is 4.

Sources

1. [1] https://www.tnsfc.tn.gov.in/constitutional_provision
2. [3] https://sfcassam.nic.in/4thSFC/chapter2.pdf
3. [2] https://www.sfc.sikkim.gov.in/visitor/aboutfincomm