Constitutional Provisions for levy of tax

In India's federal Constitution the powers of the centre and the constituent units are well
defined. The legislative powers of the Union are enumerated in list I of the seventh schedule
and those of the states in list II, the concurrent powers being found in list III. Power of
Taxation under Constitution of India is as follows:
(a) The Central Government gets tax revenue from Income Tax (except on Agricultural
Income), Excise (except on alcoholic drinks) and Customs.
(b) The State Governments get tax revenue from sales tax, excise from liquor and alcoholic
drinks, tax on agricultural income.
(c) The Local Self Governments e.g., municipalities, etc. get tax revenue from entry tax and
house property tax.
Article 265 clearly mentions that "No tax shall be levied or collected except by the authority
of law”. While different provisions from 246-254,gives different financial powers to both the
state and centre to levy taxes on its subject.
1. Article 243(h)(a) authorize a Panchayat to levy, collect and appropriate such taxes, duties,
tolls and fees in accordance with such procedure and subject to such limits;
(b) assign to a Panchayat such taxes, duties, tolls and fees levied and collected by the State
Government for such purposes and subject to such conditions and limits;
2. Article 243(x)(a) authorize a Municipality to levy, collect and appropriate such taxes,
duties, tolls and fees in accordance with such procedure and subject to such limits;
(b) assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State
Government for such purposes and subject to such conditions and limits;
3. Article 246A. The 101st Amendment of the constitution in 2016 laid down Special
provision with respect to goods and services tax.—(1) Notwithstanding anything contained in
articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State,
have power to make laws with respect to goods and services tax imposed by the Union or by
such State. (2) Parliament has exclusive power to make laws with respect to goods and
services tax where the supply of goods, or of services, or both takes place in the course of
inter-State trade or commerce.
Explanation.—The provisions of this article, shall, in respect of goods and services tax
referred to in clause (5) of article 279A, take effect from the date recommended by the Goods
and Services Tax Council.
4. Article 249 (1) Notwithstanding anything in the foregoing provisions of this Chapter, if the
Council of States has declared by resolution supported by not less than two thirds of the
members present and voting that it is necessary or expedient in national interest that
Parliament should make laws with respect to goods and services tax provided under article
246A or any matter enumerated in the State List specified in the resolution, it shall be lawful
for Parliament to make laws for the whole or any part of the territory of India with respect to
that matter while the resolution remains in force.
Inserted after amendment 101 in 2016:
5. Article 250 (1) Power of Parliament to legislate with respect to “goods and services tax
provided under article 246A or ―any matter in the State List if a Proclamation of Emergency
is in operation. Notwithstanding anything in this Chapter, Parliament shall, while a
Proclamation of Emergency is in operation, have, power to make laws for the whole or any
part of the territory of India with respect to any of the matters enumerated in the State List.
Inserted after amendment 101 in 2016
6. Article 265 clearly mentions that "No tax shall be levied or collected except by the
authority of law”.
Inserted after amendment 101 in 2016
7. Article 269A- The Amendment inserted new article ―269A. Levy and collection of goods
and services tax in course of inter State trade or commerce.—Goods and services tax on
supplies in the course of inter-State trade or commerce shall be levied and collected by the
Government of India and such tax shall be apportioned between the Union and the States in
the manner as may be provided by Parliament by law on the recommendations of the Goods
and Services Tax Council.