Sixth Finance Commission

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The Sixth Finance Commission was incorporated in the year 1973. The primary activity of the sixth finance commission is to make recommendations for the distribution of the net income of taxes between the Union and the states in India.

The Sixth Finance Commission in a nutshell

The Sixth Finance Commission follows the principles stated in the Chapter-I of part XII of the Constitution of India. It also governs the grants-in-aid for states that are in need of financial assistance to raise their revenue.

Areas of concern for the Sixth Finance Commission
  • To make recommendations with respect to the distribution of the net proceeds of taxes between the Union and the states as per Chapter-I of part XII of the Constitution of India

  • To make recommendations on the provisions regulating the grants-in-aid for the states which require financial aid under clause (1) of Article 275. The necessary funds for all these come from the Consolidated Fund of India.

  • The sixth finance commission is duly responsible for the division of taxes between various states of India

  • The sixth finance commission ensures any sort of changes necessary on the division of taxes with regard to the net proceeds of estate duty in terms of property excluding agricultural land area

  • The sixth finance commission maintains the additional excise duties on the levies imposed by Additional Duties of Excise (Goods of Special Importance) Act, 1957 on a range of commodities which include cotton fabrics, woolen fabrics, silk fabrics, tobacco, sugar, and rayon or artificial silk fabrics

  • The sixth finance commission deals with the replacement of sales tax for the above mentioned commodities

Important members of the Sixth Finance Commission

Chairman - Shri K. Brahmananda Reddi

Other important members -
Shri Justice Syed Sadat Abal Masud
Dr. B.S. Minhas
Dr. I.S. Gulati
Shri G. Ramachandran, Member Secretary

Highlights of Sixth Finance Commission
  • Grant on account of Wealth Tax on Agricultural Property
  • Division of Union Excise Duties
  • A personal approach of the Union-State Financial Relations
  • Revision of terms of repayment of outstanding Central loans for the States
  • Distribution of Additional Duties of Excise
  • Income Tax
  • Fiscal Management Policy
  • Up gradation of administration standards in backward states
  • A summary of the recommendations made by the Sixth Finance Commission
  • Reassessment of the forecasts of State Governments for the period 1974-75 to 1978-79
  • Regulations for maintenance of capital assets and schemes
  • Grants-in-aid provided to various states in India with respect to Railway Passenger Fares
  • Financing of relief expenditure
  • Distribution of Estate Duty in various states