Explanation:

Article 280 provides for a Finance Commission as a quasi-judicial body. It is constituted by the President every fifth year or even earlier. It is required to make recommendations to the President on the following matters:

• The distribution of the net proceeds of taxes to be shared between the Centre and the states, and the allocation between the states, the respective shares of such proceeds.
• The principles which should govern the grants-in-aid to the states by the Centre (i.e., out of the Consolidated Fund of India).
• The measures needed to augment the consolidated fund of a state to supplement the resources of the panchayats and the municipalities in the state on the basis of the recommendations made by the State Finance Commission.
• Any other matter referred to it by the President in the interests of sound finance.

Fiscal federalism implies the division of financial powers and responsibility between the center and the federal units. Indian constitution provides for Finance Commission under Article 280 to balance the wheel of fiscal federalism.