The Finance Commission is required to make recommendations on:
- The distribution of net proceeds of taxes between the Centre and states, and allocation among states.
- The principles governing grants-in-aid to the states by the Centre (from the consolidated fund of India).
- Measures needed to augment the consolidated fund of a state to supplement resources of panchayats and municipalities (based on state finance commission recommendations).
- Any other matter referred to it by the President in the interests of sound finance.