The State Finance Commission (SFC) is a constitutional body established under Articles 243-I and 243-Y of the Indian Constitution. It is appointed by the Governor every five years to review the financial position of Panchayati Raj Institutions and Urban Local Bodies.

The main functions of this commission are:

• To recommend the distribution of the total tax revenue collected by the State Government to the local bodies.
• To determine which taxes, duties, and fees the Panchayats and Municipalities are authorized to collect.
• To provide advice regarding the Grants-in-aid provided to local bodies from the Consolidated Fund of the State.

In short, the State Finance Commission plays a vital role in strengthening the grassroots governance system and ensuring the success of financial decentralization.