Why in news? The Karnataka state government constituted fifth state finance commission

Highlights:

• Finance commission is headed by former MP C Narayanaswamy, the panel will have retired IAS officer Mohamed Sanaulla and retired Controller in the State Accounts Department R S Phonde as members.
• The panel is directed to submit its report by the end of February 2024.

About State Finance Commission

• It is created by the 73rd and 74th Constitutional Amendments to rationalize State or sub-State-level fiscal relations in India.
• Commission is constituted under Article 243-I of the Constitution of India
• It is constituted every five year by the governor of a state
• Article 243-Y deals with city councils or municipalities under the purview of the State Finance Commission.

What are the principles to govern the state finance commission ?

• Distribution of net proceeds of the taxes, duties, tolls and fees between the State and the Panchayats
• Determination of the taxes, duties, tolls and fees assigned and appropriated by the Panchayats
• The panel look into grants-in-aid to the Panchayats from the Consolidated Fund of the State and the measures needed to improve their financial position
• The commission will review the financial position of the zilla panchayats, taluk panchayats, gram panchayats, municipal corporations, city municipal councils, town municipal councils and town panchayats.
• It will make recommendations to determine the principles, that govern the distribution between the state government and various ULBs and panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the government.
• Commission shall have regard to the resources of the State Government and the demands thereon on account of expenditure of civil administration, debt servicing, development and other committed expenditure