I. To examine, with the aid of the memoranda on the distribution of revenue between the Centre and the provinces sent by the Government of India and the provinces, the existing provisions relating to finance and borrowing powers in the Government of India Act, 1935, and their working during the last ten years and to make recommendations as to the entries in the lists and sections to be embodied in the new Constitution.

The following points shall, in particular, be kept in view in making the recommendations:

(a) How are taxes to be allocated between the Centre and the units as regards legislation, levy and collection?

(b) Which are the Federal taxes—

(i) whose net proceeds are to be retained entirely by the Centre;

(it) whose net proceeds are to be entirely made cwer to units;

(iii) whose net: proceeds are to be shared between thé Centre and the units?

(c) On what. principles are the taxes mentioned in (b} Gi to be shared between the Centre and the units?

(d) What is to be the machinery – for determining the shares: e.g., whether a Financial Commission should be appointed immediately after the enactment of the Constitution to report on the principles of sharing and their application to be brought into effect when the Constitution comes into force; and whether the same or a similar ‘Commission should review these principles and their concrete application periodically, say, once in five years?