The correct answer is (c) 7 years.
The Finance Commission is a constitutional body constituted every five years to review the financial relations between the Union and the States and to make recommendations to the President on the distribution of net proceeds of taxes, duties, tolls and fees between the Union and the States, the allocation of the shared taxes between the States, the principles governing grants-in-aid to the States and any other matter referred to it by the President in connection with the financial relations between the Union and the States.
The Finance Commission is constituted by the President of India on the recommendation of the Prime Minister. The Commission consists of a Chairman and four other members, who are appointed by the President. The Chairman is usually a retired judge of the Supreme Court or the High Court. The other members are usually experts in the fields of economics, finance, public administration and law.
The Finance Commission submits its report to the President, who places it before the Parliament. The Parliament is not bound to accept the recommendations of the Finance Commission, but it usually does so. The recommendations of the Finance Commission are implemented by the Union and the State Governments.
The Finance Commission has played a significant role in the development of the Indian economy. Its recommendations have helped to improve the financial relations between the Union and the States and to promote economic development in the States.
The first Finance Commission was constituted in 1951. The latest Finance Commission was constituted in 2020.