Division of Taxing Powers Among the ListsImportance 5/5UPSC 2024
Which Articles, and which Part of the Constitution, deal with financial relations? Remember how many tax entries the Union List and the State List each have, and whether the Concurrent List has any. Understand the exception made for GST, and who holds the residuary power of taxation.
Levy, Collection and Appropriation of a TaxImportance 4/5UPSC 1999, 2003
Understand the difference between the power to levy and collect a tax and the power to appropriate its proceeds. Use income tax as the example: who levies and collects it, and who shares its proceeds?
Restrictions on the Taxing Powers of StatesImportance 4/5
What four limits does the Constitution put on the taxing powers of states? Remember the ceiling on taxes on professions, trades, callings and employments (present and original amount, and the amendment that raised it, Article 276), the bar on taxing certain supplies of goods and services (Article 286), the exemptions on electricity (Article 287), and the condition for taxing water or electricity of an inter-state river authority (Article 288).
80th Amendment and the Alternative Scheme of DevolutionImportance 4/5UPSC 2001
Which Finance Commission's recommendation did the 80th Amendment Act of 2000 put into effect, and what share of central taxes was to go to the states? Remember the date from which it took effect, and understand how it changed the sharing of taxes such as corporation tax and customs duties. Which Article did it delete?
101st Amendment and the Taxes Subsumed in GSTImportance 5/5
Why was GST introduced by the 101st Amendment Act of 2016? Understand the problem of the cascading effect of taxes and the aim of a common national market. Remember the main Central and state taxes that GST subsumed, and the service tax provisions (Article 268A and Entry 92C of the Union List, added by the 88th Amendment) that were deleted.
Taxes Levied by the Centre but Collected and Appropriated by the States (Article 268)Importance 4/5UPSC 2003
Under Article 268, which duties does the Centre levy but the states collect and keep? Understand where their proceeds go: do they form part of the Consolidated Fund of India?
Taxes Levied and Collected by the Centre but Assigned to the States (Article 269)Importance 4/5
Which two taxes on inter-state trade or commerce fall under Article 269 (and which goods are left out)? Understand how their net proceeds reach the states, and on whose principles.
GST in the Course of Inter-State Trade or Commerce (Article 269A)Importance 4/5
Under Article 269A, who levies and collects GST on inter-state supplies, and how is it divided between the Centre and the states? Know the GST Council's role in this division, and Parliament's power to set the principles for deciding the place of supply.
Taxes Shared Between the Centre and the States (Article 270)Importance 5/5UPSC 1999
Which taxes form the pool shared between the Centre and the states under Article 270? Remember the three kinds of levies left out of it, and who decides how the net proceeds are divided, on whose recommendation. Is the GST collected by the Centre (CGST) also shared with the states?
Surcharges for Purposes of the Centre (Article 271)Importance 4/5UPSC 1999
On which taxes can Parliament levy a surcharge under Article 271, and do the states get any share of it? Can such a surcharge be imposed on GST?
Taxes Belonging Exclusively to the StatesImportance 3/5UPSC 1995
Remember the taxes that the states alone levy, collect and keep: how many there are, the important ones in the State List, and which two State List tax entries the 101st Amendment omitted.
Non-Tax Revenue Sources of the Centre and the StatesImportance 2/5
Learn the main sources of non-tax revenue for the Centre and for the states. Which sources belong to each, and which appear on both lists?
Statutory Grants (Article 275)Importance 5/5UPSC 2002
Article 275 provides for statutory grants. Understand who makes them, whether every state gets them, and where the money is charged. Remember the specific grants for the welfare of Scheduled Tribes and for Scheduled Areas, and on whose recommendation all these grants are given.
Discretionary Grants (Article 282)Importance 5/5
Under Article 282, what can the Centre and the states make grants for, even outside their legislative competence? Why are these grants called discretionary, and how do they differ from statutory grants? Understand the two purposes they serve.
Grants in Lieu of Export Duty on Jute (Article 273)Importance 2/5
Which states received grants in lieu of export duty on jute and jute products, for how long after the Constitution came into force, and on whose recommendation?
GST Council: Basis and Functions (Article 279A)Importance 5/5
Why was the GST Council needed, and how was it created? Remember the amendment, Article 279A, and the time limit given to the President to constitute it. Understand its nature as a joint forum of the Centre and the states: who its members are, who chairs it, and how it takes decisions (the weight of the Centre's and the states' votes). Know the matters on which it makes recommendations, including the special provision for the North-Eastern and hill states. Are its recommendations binding on Parliament and the state legislatures (Mohit Minerals case, 2022)?
Finance Commission's Role in Centre–State Finance (Article 280)Importance 5/5UPSC 2000, 2011
What kind of body is the Finance Commission under Article 280, and who constitutes it, how often? Know the matters it recommends on, including the functions for panchayats and municipalities added by the 73rd and 74th Amendments, and its role on jute payments till 1960. Why is it called the "balancing wheel of fiscal federalism"? (This is a common description, not words of the Constitution.)
Bills Requiring the President's Recommendation (Article 274)Importance 4/5
Which four kinds of bills can be introduced in Parliament only on the President's recommendation, to protect the states' financial interest? Understand what "tax or duty in which states are interested" means.
Meaning of "Net Proceeds" and the CAG's Certificate (Article 279)Importance 3/5
What does the "net proceeds" of a tax or duty mean? Understand the role of the CAG in working out and certifying the net proceeds, and whether that certificate is final.
Borrowing Powers of the Centre and the States (Articles 292, 293)Importance 5/5
Where can the Centre borrow, and where can a state borrow? Know on what security each borrows and who fixes the limits. Understand the Centre's power to lend to states or guarantee their loans, and when a state needs the Centre's consent before raising a loan.
Exemption of Central Property from State Taxation (Article 285)Importance 4/5
Is the Centre's property exempt from taxes imposed by a state or by local bodies, and can Parliament remove this exemption? Understand how widely "property" is defined, and whether corporations and companies created by the Centre share this exemption (and why).
Exemption of State Property or Income from Central Taxation (Article 289)Importance 4/5
When can the Centre tax a state's property or income? Understand the rule for a state's commercial operations and the exception for trades that Parliament declares incidental to government. Are local authorities and state-owned corporations exempt? Know what the Supreme Court held in its advisory opinion in In re Sea Customs Act about customs and excise duties.
Financial Relations During a National EmergencyImportance 4/5
During a national emergency (Article 352), what can the President do to the distribution of revenues between the Centre and the states? Remember how long such a change lasts.
Financial Relations During a Financial EmergencyImportance 4/5
While a financial emergency (Article 360) is in operation, what three directions can the Centre give the states?