(1) The Finance Commission when constituted by the Government shall review the financial position of the municipalities and make recommendations to the Government as to––
(a) the principles which should govern––
(i) the distribution between the Government and the municipalities of the net proceeds of taxes, duties, tolls and fees leviable by the 1[Union territory of Jammu and Kashmir], which may be divided between them and the 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 grants-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 ; and
(c) any other matter referred to the Finance Commission by the Government in the interest of sound finances of the municipalities.
(2) The Government shall cause every recommendation made by the Finance Commission under this section together with an explanatory memorandum as to the action taken thereon to be laid before *[the Legislature of the State].
(a) the principles which should govern––
(i) the distribution between the Government and the municipalities of the net proceeds of taxes, duties, tolls and fees leviable by the 1[Union territory of Jammu and Kashmir], which may be divided between them and the 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 grants-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 ; and
(c) any other matter referred to the Finance Commission by the Government in the interest of sound finances of the municipalities.
(2) The Government shall cause every recommendation made by the Finance Commission under this section together with an explanatory memorandum as to the action taken thereon to be laid before *[the Legislature of the State].
Source footnotes
1. Substituted for “State” by S.O. 3466 of 2020.* Now the 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.