Constitutional Basis: The State Finance Commission is a constitutional body established by Article 243-I (for Panchayats) and Article 243-Y (for Municipalities) of the Constitution of India.
Nature of the Body: Unlike permanent bodies like the Election Commission, the SFC is not a permanent body. It is constituted by the Governor of the respective state as and when required, typically every five years, similar to the Union Finance Commission.
Functions: The primary functions of the SFC include recommending measures for the devolution of state taxes, duties, tolls, and fees between the state and its Panchayats/Municipalities, and the allocation of revenues to Panchayats/Municipalities.
Tenure and Re-appointment: The SFC is constituted for a period specified by the state legislature in the law under which it is established. While not explicitly stated in the Constitution, the members of the SFC are generally eligible for re-appointment. This is a common practice for such commissions, allowing for continuity and utilization of expertise.
Key Distinction: It's crucial to differentiate the SFC from the Union Finance Commission (Article 280), which is a central body and has a more permanent institutional framework, though its composition changes every five years.
