First Finance Commission

Members

• Shri K. C. Neogy, Chairman
• Shri V. P. Menon
• Shri Justice R. Kaushalendra Rao
• Dr. B. K. Madan
• Shri M.V. Rangachari Member-Secretary
• Shri V. L. Mehta

Recommendations

• The share of States in the proceeds of income tax was to be 55 per cent.
• The First Commission recommended that shares of States in the Union excise duties be 40 per cent of the proceeds of the tax on three commodities, 25 per cent of the proceeds of the tax on eight commodities and 20 per cent of the proceeds of the tax on 35 commodities, respectively.
• As far as Horizontal Distribution is concerned, overwhelming weightage is given to Population. Only residual weightage of 20% given to contribution.
• No recommendations regarding grants for meeting capital requirements of the state were made by the commission.
• The Commission provided Grants in- Aid to only four states, namely, Assam Bihar, Orissa and West Bengal. However, Grants were provided to many states under Substantive Portion of Article 275 and under the head of Primary education grants.
• All recommendations made by the commission were accepted by the Union Government.