India's federal structure includes periodic committees and commissions that decide on Centre-State relations. Which body, set up as a result, decides the sharing of tax revenues between Centre and States?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → The Finance Commission
Option (1) The GST Council — Incorrect. The GST Council includes State members and deals with the Goods and Services Tax. Its role is decisions on that one tax, so the five-yearly sharing of tax revenues lies outside it.
Option (2) The State Planning Commissions — Incorrect. State Planning Commissions prepared detailed State Plans for each Five Year Plan, up to 2017. They planned development within a state and did not divide tax revenues with the Centre.
Option (3) The Finance Commission — Correct. The Finance Commission is set up every five years to decide on sharing tax revenues between Centre and States. It is the standard example of the periodic commissions on Centre-State relations.
Option (4) The Rajya Sabha — Incorrect. The Rajya Sabha is the upper house of Parliament, and the State legislatures decide its composition. It is a house of Parliament, so it does not decide the sharing of tax revenues.
NCERT (2026-27): “6.2 Regionalism in the Indian Context … |