The Finance Commission of India came into existence in 1951. The Finance commission is established under article 280 of the Indian Constitution of India by the President of India. The Indian Finance Commission Act was passed to give a structured format to the Finance Commission of India as per the world standard. The need for the Finance Commission was felt by the British for guiding the Finance of India. The structure of the modern Act was laid in the early 1920's. The Finance Commission is formed to define the financial relations between the centre and the state. The Finance Commission Act of 1951 tells about the qualification, appointment, term, eligibility, disqualification, powers etc of the Finance Commission.

Qualifications for appointment and the manner of selection:
The Chairman of the Finance Commission is selected among persons who have had the experience of public affairs, and four other members are selected among persons who

Are, or have been, or are qualified as judges of High Court, or
Have knowledge of finances, or
Have vast experience in financial matters and are in administration, or
Have knowledge of economics.

Term of Office of the members:
Every member of the commission shall be in the office as specified by the President. He can also be reappointed, provided that he has already addressed a letter to the president for his resignation.

Disqualification:
A member may be disqulaified if:

He is of unsound mind.
He is involved in a vile act.
If his interests are likely to affect the smooth functioning of the Commission.

Powers of the Commission:
The Finance Commission has the following powers:

The Commission shall have all the powers of the Civil Court as per the Code of Civil Procedure, 1908.
It can call any witness, or can ask for the production of any public record or document from any court or office.
It can ask any person to give information or document on matters as it may feel to be useful or relevant.
It can function as a civil court in discharging its duties.