(1) The Governor shall, as soon as may be within one year from the commencement of this Act and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Municipalities and to make recommendations to the Governor as to––
(a) the principle which should govern––
(i) the distribution between the 1[Union territory of Jammu and Kashmir] and the Municipalities of the net proceeds of the taxes, duties, tolls and fees leviable by the 1[Union territory of Jammu and Kashmir], which may be divided between them under this part and allocation between the Municipalities at all levels of their respective shares of such proceeds ;
(ii) the determination of the taxes, duties, tolls and fees which may be assigned to or appropriated by the Municipalities ;
(iii) the grant-in-aid to the Municipalities from the Consolidated Fund of the 1[Union territory of Jammu and Kashmir] ;
(b) the measures needed to improve the financial position of the Municipalities ;
(c) any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Municipalities.
(2) The Government may, by notification, provide for composition of the Commission, the qualification which shall be requisite for appointment as members thereof and the manner in which they shall be selected.
(3) The Commissioner shall determine their procedure and shall have such powers in the performance of their function as the Government may, by notification, confer on them.
(4) The Governor shall cause every recommendation made by the Commission under this section together with an explanatory memorandum as to the action taken thereon to be laid before the *[State Legislature].
(a) the principle which should govern––
(i) the distribution between the 1[Union territory of Jammu and Kashmir] and the Municipalities of the net proceeds of the taxes, duties, tolls and fees leviable by the 1[Union territory of Jammu and Kashmir], which may be divided between them under this part and allocation between the Municipalities at all levels of their respective shares of such proceeds ;
(ii) the determination of the taxes, duties, tolls and fees which may be assigned to or appropriated by the Municipalities ;
(iii) the grant-in-aid to the Municipalities from the Consolidated Fund of the 1[Union territory of Jammu and Kashmir] ;
(b) the measures needed to improve the financial position of the Municipalities ;
(c) any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Municipalities.
(2) The Government may, by notification, provide for composition of the Commission, the qualification which shall be requisite for appointment as members thereof and the manner in which they shall be selected.
(3) The Commissioner shall determine their procedure and shall have such powers in the performance of their function as the Government may, by notification, confer on them.
(4) The Governor shall cause every recommendation made by the Commission under this section together with an explanatory memorandum as to the action taken thereon to be laid before the *[State Legislature].
Source footnotes
1. Substituted for “State” by S.O. 3466 of 2020.* Now Legislative Assembly of the Union territory of Jammu and Kashmir.
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More sections of this act
Section 1 · Short title, extent and commencement.Section 2 · Definitions.Section 2A · Substitution of expression.Section 3 · Classification of municipalities.Section 4 · Procedure for declaring muni-cipal area.Section 5 · Notification of intention to include a local area in a municipal area.Section 6 · Notification of intention to exclude local area from a municipal area.Section 7 · Exclusion of local area from a municipal area.India Code, Government of India. Text fetched 13 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.