This paper has been published in Peer-reviewed International Journal "Remarking An Analisation" URL : https://www.socialresearchfoundation.com/new/publish-journal.php?editID=8936 Publisher : Social Research Foundation, Kanpur (SRF International) Abstract : This paper discusses the allocation of State Resources to Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) at all three levels in the form of taxes, charges and levies collected by the State Government and Local Bodies. The Finance Commission was created under Article 280 to distribute revenue from the Central Government to the State Government through taxes and grants, but there was no provision for the devolution of revenue resources from the State Government to the Local Government. Local Bodies did not have sufficient resources to meet their expenses. The difference between the expenses of the Local Bodies and the revenue generated by them can be seen very easily. Local Bodies own revenue resources are not enough for their expenses like secondary and higher education, health and hospitals, highways and roads, police, housing, courts, public welfare etc. So, they depend on the revenue of the State Government for their expenses. To overcome these limitations and inadequacies and to give a constitutional status to Local Bodies, the Government of India made 3 institutions at the level of each State, The State Finance Commission is in one of them. The 73rd and 74th constitutional amendment gives protection and powers to Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs). This paper will also examine the performance of the State Finance Commission in revenue sharing between the State Government and Local Bodies. In this paper, we will also understand how the State Government devolve revenue resources with Local bodies through the provision of the State Finance Commission. This study will analyse the Uttar Pradesh state and its local bodies, revenue devolution including grants and taxes and assess revenue sources of Local Bodies.