The Nagaland State Finance Commission Act, 2025

1. (1) This Act may be called "The Nagaland State Finance Commission Act, 2025".
2. (2) It extends to the whole of the State of Nagaland.
3. (3) It shall come into force on such date as the State Government may, by notification in the Official Gazette, appoint.

In this Act, unless the context otherwise requires: -

1. (a) "Act" means the Nagaland State Finance Commission Act, 2025.
2. (b) "Commission" means the Nagaland State Finance Commission constituted under Section 3 of the Act.
3. (c) "Government" means either the Central Government or the State Government;
4. (d) “Local Bodies” means—
   • (i) Village Councils constituted under the Nagaland Village and Tribal Councils Act, 1978 (as amended);
   • (ii) Municipal and Town Councils constituted under the Nagaland Municipal Act, 2023 (as amended);
5. (e) “Member” means a member of the Commission and includes the Chairperson;
6. (f) “Prescribed” means prescribed by rules made under this Act.
7. (g) “State” means the State of Nagaland.
8. (h) “State Legislature” means the Legislature of the State of Nagaland.
   • (i) “State Government” means the Government of the State of Nagaland.

1. (1) The Governor shall by notification in the Official Gazette constitute a body known as the Nagaland State Finance Commission to exercise such powers conferred on, and to perform the functions assigned to it under the Act and at the expiration of every fifth year from the date of its initial constitution under this Act, re-constitute the Commission.
2. (2) The Commission shall review the financial position of the Local Bodies and make recommendations as to: -
   • (a) the principles which shall govern:-
     • (i) the distribution between the State and the Local Bodies of the net proceeds of taxes, duties, tolls and fees leviable by the State, wherever applicable;
     • (ii) the determination of taxes, duties, tolls and fees which may be assigned to by any law in force or orders, or appropriated by, the Local Bodies, wherever applicable;
     • (iii) the grants-in-aid to the Local Bodies from the Consolidated Fund of the State, wherever applicable;
   • (b) the measures needed to improve the financial position of the Local Bodies;
   • (c) any other matter referred to the Commission by the Governor in the interest of sound finances of the Local Bodies.

Composition of the Commission

1. (1) The Commission shall consist of: -
   • (a) A Chairperson, who shall be a person of eminence with experience in public affairs, preferably in the affairs of the Government, and having the qualification to be a Member of the Commission.
   • (b) Either two or four Members, excluding the Chairperson, who shall be selected from amongst persons possessing: -
     • (i) special knowledge of public finance and accounts of the Government, or
     • (ii) knowledge of customary institutions and rural governance, or
     • (iii) knowledge of urban administration and development, or
     • (iv) wide experience in financial matters and in administration.
   • (c) A Secretary of the Commission appointed by the State Government.
2. (2) The Chairperson and other Members shall be appointed by the Governor of Nagaland.

1. (1) The Chairperson and Members shall hold office for such period as may be specified in the order of appointment, but not exceeding five years.
2. (2) They shall be eligible for reappointment.
3. (3) The salaries, allowances and other conditions of service shall be such as may be prescribed by the State Government.
4. (4) A Member may tender his/ her resignation, by letter addressed to the Governor of Nagaland.

Before appointing a person to be a Member of the Commission, the State Government shall satisfy itself that the person will have no such financial or other interests as is likely to affect prejudicially his/her functions as a Member of the Commission and the State Government shall also satisfy itself from time to time with respect to every Member of the Commission that he/she has no such interest and any person, who is or, whom the State Government proposes to be, a Member of the Commission shall, whenever required by the State Government so to do, furnish such information as the State considers necessary for the performance of his/ her duties under this Act.

A person shall be rendered disqualified and removed from office as the Chairperson or Member of the Commission if:-

1. (a) he/ she is of unsound mind;
2. (b) he/ she is an undischarged insolvent;
3. (c) he/ she has been convicted of an offence involving moral turpitude;
4. (d) he/ she has such financial or other interest as is likely to prejudicially affect the discharge of his/her functions as a Member of the Commission.

A person can be removed as Chairperson/ Member of the Commission, if:-

1. (a) in the opinion of the Government, he/she has abused his position as Chairperson/ Member as to render his/her continuance in the office detrimental to the public interest;
2. (b) the Chairperson or Member of the Commission shall be removed on grounds of proved misbehaviour or incapacity, after such enquiry as may be prescribed;

Procedure and Powers of the Commission

1. (1) The Commission shall determine its own procedure and method of functioning as assigned to under this Act.
2. (2) The Commission, in the performance of its functions, while considering any matter, shall have the power to:-
   • (a) summon and enforce the attendance of any official, person or witnesses;
   • (b) require the production of any document;
   • (c) requisition of any public record from any Government Office, Village and Municipal/ Town Council.
3. (3) The Commission shall have the power to require any person or authority, including Local Bodies, to furnish information on such points or matters as in the opinion of the Commission may be useful for, or relevant to, any matter under the consideration of the Commission and any person so required shall, notwithstanding anything contained in any law for the time being in force, be deemed to be legally bound to furnish such information within the meaning of the provision of the Bharatiya Nyaya Sanhita (BNS).

1. (1) The Commission shall submit its Report to the Governor by such date as may be specified in the order constituting it.
2. (2) The Governor shall cause every Report, together with an Explanatory Memorandum as to the action taken thereon, to be laid before the State Legislature.

1. (1) The State Government may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act.
2. (2) In particular without prejudice to the generality of the foregoing powers, such rules may provide for all or any of the following matter, namely: -
   • (a) procedure for removal of Chairperson/Members under Section 8;
   • (b) the salaries and allowance payable to and the other terms and conditions of service of Chairperson and Members under Section 5 and Section 6;
   • (c) the Term of Reference of the Commission;
   • (d) any other matter which is required to be may be prescribed.
3. (3) Every Rule made under this Act shall, as soon as may be after it is made, be laid before the State Legislature.

No suit, prosecution or other legal proceeding shall lie against the Commission or any Member thereof, for any action taken in good faith under this Act.

1. (1) If any difficulty arises in giving effect to the provision of this Act, the State Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provision of this Act as appear it to be necessary for removing the difficulty. Provided that no such order shall be made after the expiry of two years from the date of commencement of this Act.
2. (2) Every Notification issued under this Section shall, as soon as may be after it is made, be laid before the State Legislature.

1. (1) From the commencement of this Act, the State Finance Commission constituted under Section 125 of the Nagaland Municipal Act, 2023 shall mean the State Finance Commission constituted under this Act.
2. (2) The Nagaland State Finance Commission Rules, 2008 made under the Nagaland Municipal Act, 2001 are hereby repealed.
3. (3) Notwithstanding such repeal, anything done or any action taken under the said Sections shall deem to have been done or taken under the corresponding provisions of this Act.