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Correct Option is Both

Article 280 of the Constitution of India provides for a Finance Commission as a quasi-judicial body. It is constituted by the president of India every fifth year or at such earlier time as he considers necessary. Finance Commission is required to make recommendations to the President of India on 1.The net tax proceeds distribution to be divided between the Centre and the states, and the allocation of the same between states. 2.The principles governing the grants-in-aid to the states by the Centre out of the consolidated fund of India. 3.Steps required to extend the consolidated fund of a state to boost the resources of the panchayats and the municipalities of the state on the basis of the recommendations made by the state Finance Commission. Hence both the statements are incorrect.

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