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Question

Which of the following statements about the Finance Commission of India is correct?

This question was previously asked in
SSC CGL 2025 Tier 2 Paper 1 Question Paper (19-Jan-2026)
The correct answer is

Its recommendations are advisory in nature and not legally binding.

The Finance Commission is constituted under Article 280 of the Constitution every five years to recommend principles for the distribution of tax revenues between the Centre and the States.

(A) Recommendations binding: Incorrect. The Commission's recommendations are not legally binding on the government.

(B) Members' tenure: Incorrect. Members can be removed by the President for reasons specified in rules made under the Finance Commission (Miscellaneous Provisions) Act, 1951; their tenure is not absolutely protected from executive action.

(C) Advisory in nature: Correct. The recommendations are advisory; the President places them before Parliament along with an explanatory memorandum on the action taken (Article 281), and the government is not legally compelled to accept them.

(D) Direct submission for enactment: Incorrect. The report is submitted to the President, who lays it before each House of Parliament — it is not enacted by Parliament directly.

Hence the correct option is (C).

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