The Finance Commission was established by the President of India in 1951 under Article 280 of the Indian Constitution. It was formed to define the financial relations between the central government of India and the individual state governments.


Chairman + 4 other members, appointed by the President. They are eligible for reappointment, and hold office for as long as the President specifies in his order.

  1. Parliament determines the qualification of members, as well as their selection procedure, according to the Finance Commission Act, 1951.

Qualifications of the members:

The Chairman of the Finance Commission is selected from people with experience of public affairs. The other four members are selected from people who:

  1. Are, or have been, or are qualified, as judges of High Court,
  2. Have knowledge of Governmentfinances or accounts, or
  3. Have had experience in administration and financial expertise; or
  4. Have special knowledge of economics

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Procedure and Powers of the Commission:

The Commission has the power to determine their own procedure and:

  1. Has all powers of the civil court as per the Civil Procedure Code, 1908
  2. Can summon and enforce the attendance of any witness or ask any person to deliver information or produce a document, which it deems relevant.
  3. Can ask for the production of any public record or document from any court or office.
  4. Shall be deemed to be a civil court for purposes of Sections 480 and 482 of the Code of Criminal Procedure, 1898

Terms of Office of Members and Eligibility for Reappointment:

Every member will be in office for the time period as specified in the order of the President, but is eligible for reappointment provided he has, by means of a letter addressed to the president, resigned his office.

 Salaries and Allowances of the members:

The members of the Commission shall provide full-time or part-time service to the Commission, as the President specifies in his order. The members shall be paid salaries and allowances as per the provisions made by the Central Government.

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