The correct answer is Option 3 - Union Finance Commission. The Union Finance Commission is an independent constitutional body responsible for recommending to the President of India the distribution and allocation of the net proceeds of taxes between the central government and state governments.

Let`s analyze the other options to understand why they are not the correct answers:

Option 1 - Planning Commission: The Planning Commission was dissolved in 2014 and replaced by the NITI Aayog. The Planning Commission was responsible for formulating five-year plans for economic and social development. Its role did not involve recommending the distribution of net proceeds of taxes.

Option 2 - Union Ministry of Finance: The Ministry of Finance is a governmental department responsible for the management of public finances, including budgeting, taxation, and financial legislation. While it plays a crucial role in fiscal matters, the recommendation of the allocation of net proceeds of taxes is not within its jurisdiction.

Option 4 - National Development Council: The National Development Council is a consultative body that brings together the central and state governments to discuss and deliberate on matters of national importance, including economic planning and development. However, its role is advisory in nature and does not include making recommendations on the distribution of tax proceeds.

In conclusion, the Union Finance Commission is the correct entity