Which of the following statements about the Finance Commission of India is correct?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Its recommendations are advisory in nature and not legally binding.
The Finance Commission, a quasi-judicial body established under Article 280 of the Constitution, serves as the primary balancer of federal finances. While its recommendations regarding the distribution of net tax proceeds between the Union and States are highly respected and generally accepted by the government, they are formally advisory.
There is no constitutional or legal provision that makes these recommendations mandatory.
The government usually implements them through executive orders or presidential notifications, maintaining the flexibility of the Union's fiscal management while respecting the Commission's expert findings.