Consider the following statements:
1. The devolution of central taxes and duties to the states is guided by recommendations of the finance commission.
2. The 15th Finance Commission reverted back the principle of sharp increase in devolution of Central Taxes to states from 42% to 31%.
Which of the statements above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Explanation Statement 1 is correct: The devolution of central taxes and duties to the states is guided by the recommendations of the Finance Commission. The Finance Commission is a constitutional body that recommends the distribution of the net proceeds of taxes between the Union and the States, as well as the allocation among the States themselves.
Statement 2 is not correct: The devolution of central taxes and duties is guided by the recommendations of the finance commission , constituted under article 280 of the constitution of India . Recognising that strong states build a strong nation , the union government accepted a sharp increase in the devolution from 31 percent to 42 percent ,as recommended by the 14th finance commission.The 15 th Finance commission retained this principle ,recommending a 41 percent share for states ,with a 1 percent reduction due to the reorganisation of jammu and kashmir into a union territory. These recommendations were fully accepted by the centre.
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