Finance Commission

(1) The Finance Commission shall review the financial position of the municipalities and make recommendations to the Government as to-

(a) the principles which should govern-

(i) the distribution between the State and the municipalities of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them and the allocation between the municipalities at all levels of their respective shares of such proceeds;

(ii) the determination of the taxes duties, tolls and fees which may be assigned to, or appropriated by, the municipalities;

(iii) the grants-in-aid to the municipalities from the Consolidated Fund of the State;

(b) the measure needed to improve the financial position of the municipalities;

(c) any other matter referred to the Finance Commission in the interest of sound finances of the municipality.

(2) Every recommendation made by the Finance Commission together with an explanatory memorandum as to the action taken thereon shall be laid before the State Legislature.