Financial distribution between the Union and the State takes place on the basis of the recommendations of which one of the following ?

The financial distribution between the Union and the States is primarily governed by the recommendations of the Finance Commission. Established under Article 280 of the Constitution of India, the Finance Commission is a quasi-judicial body constituted by the President every five years [c1, c3]. Its core mandate includes recommending the 'vertical devolution'—the distribution of net proceeds of taxes between the Union and the States—and 'horizontal devolution'—the allocation of those shares among the States [t5, t6]. Additionally, it defines the principles governing grants-in-aid to the States from the Consolidated Fund of India under Article 275 [t2, t4]. While the Planning Commission (now NITI Aayog) historically handled plan-based transfers and the Inter-State Council facilitates policy coordination, the constitutional authority for recommending the formulaic sharing of tax revenues and fiscal resources rests solely with the Finance Commission [c1, t3].

Sources

1. [1] Introduction to the Constitution of India, D. D. Basu (26th ed.). > Chapter 25: DISTRIBUTION OF FINANCIAL POWERS > The States, similarly, have their receipts from- > p. 387
2. [2] Indian Polity, M. Laxmikanth(7th ed.) > Chapter 15: Centre-State Relations > I I Finance Commission > p. 156
3. [3] https://www.pib.gov.in/newsite/printrelease.aspx?relid=115810
4. [4] https://fincomindia.nic.in/about-us
5. [5] http://www.sikkimfred.gov.in/FCD/DOCUMENTS16th_FC/Memorandum%20to%20the%2016th%20Finance%20Commission%20Sikkim.pdf
6. [6] https://www.hansrajcollege.ac.in/hCPanel/uploads/elearning/elearning_document/Fourteenth_Finance_Commission-_Continuity,JChange_and_Way_Forward_Notes-Y_V_Reddy.pdf
7. [7] https://fincomindia.nic.in/asset/doc/commission-reports/12th-FC/reports/eng/Chapter%2007.pdf