The primary function of the Finance Commission in India is to

The Constitutionally mandated primary role of the Finance Commission is to recommend how the net proceeds of taxes should be distributed between the Centre and the States (vertical devolution) and how the States’ shares should be allocated among themselves (horizontal devolution). This duty — including recommending principles for grants‑in‑aid to States and measures to augment state finances — is explicitly set out as the Commission’s main terms of reference under Article 280, and is repeatedly listed as the first and foremost function in authoritative descriptions of the Commission’s remit [1]. Official accounts of Finance Commissions likewise state that resolving vertical and horizontal fiscal imbalances by tax devolution and grants is the Commission’s core purpose [2].

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 1. Finance Commission Grants > p. 182
2. [2] https://fincomindia.nic.in/asset/doc/commission-reports/15th-FC/reports/studies/Resource%20sharing%20between%20Centre%20and%20States%20and%20allocation%20across%20States.pdf