Taxes and Constitutional Limitations By Adv Surajit Maity

In our constitution, we have 395 articles in 22 parts and 8 schedules at the time of commencement. Now the Constitution of India has 448 articles in 25 parts and 12 schedules with 104 Amendments up to 25Th January, 2020.

Preamble of the Indian Constitution as below:-


we the people of India having solemnly resolved to Constitute India into a sovereign socialist secular democratic republic and to secure to all its citizens:

JUSTICE, social, economic and political; 

LIBERTY of thought, expression, belief, faith and worship;

EQUALITY of status and of opportunity;

and to promote among them all FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;


Taxation is an imposition of compulsory levies on individuals or entities by governments. Taxes are levied in almost every country of the world, primarily to raise revenue to meet government expenditures as well as development of that country.

Article 265 of the Indian Constitution is most of the important part of the Taxation it says that

‘No tax shall be levied or collected except by the “Authority of law”

Article 265 is applicable not only for “levy” but also for the collection of taxes and the expression “assessment” within its compass covers both the aspects carried out by the executive functionary.

Powers of Union/ Central Government and State Government bifurcated vide Seventh Schedule to the Constitution of India to make Laws related to Taxation is as follows:-

Three lists to the seventh schedule to the Constitution of India:-

Union List- only parliament can make law

State List- only state legislatures can make laws

Concurrent List - both central government and state government have power to make laws

Union List with Serial no. where Union can Collect Tax and Make laws:-

Entry Serial No. 82 Tax on Income other than agriculture income

Entry Serial No. 83 Duties of customs including export duties.

Entry Serial No. 84 Duties of excise on goods manufactured or produced in India namely petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel, tobacco and tobacco products.

Entry Serial No. 85 Corporation tax

Entry Serial No. 86 Taxes on capital value of the assets, exclusive of agricultural lands, of indivduals and companies; taxes on the capital of companies.

Entry Serial No.87 Estate duty in respect of property other than agricultural land

Entry Serial No.88 Duties in respect of succession to property other than agricultural land

Entry Serial No. 89 Terminal taxes on goods or passengers, carried by railways, sea or air, taxes on railway fares and freight.

Entry Serial No. 90 Taxes other than stamp duties on transactions in stock exchanges and future markets.

Entry Serial No. 91 Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.

Entry Serial No. 92 A Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-state trade or commerce or

Entry Serial No. 92B Taxes on consignment of goods (whether the consignment is to the person making it or to any other person) where such consignment takes place in the course of Inter-state trade or commerce

Entry Serial No. 96 Fees in respect of any matters in the Union List,but not including fees taken in any court.

Entry Serial No. 97 Any other matter not enumerated in List II or List III including any tax not mentioned in List II and List III.

State List with Serial no. where State can Collect Tax and Make laws:-

Entry Serial No. 46 Taxes on agricultural income

Entry Serial No. 51 Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:-

  1. Alcoholic liquors for human consumption;

  2. Opium, Indian hemp and other narcotic drugs and narcotics, but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.

Entry Serial No. 53  Taxes on the consumption or sale of electricity

Entry Serial No. 54 Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.]

Entry Sl No. 55 Taxes on advertisements other than advertisements published in the newspapers 2 [and advertisements broadcast by radio or television].

Entry Serial No. 56 Tax on goods and passengers carried by road or inland waterways.

Entry Serial No. 60 Tax on professionals, trades, callings and employment.

Entry 61 Capitation taxes

Entry 62 Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or Regional Council or a District Council.

Concurrent List with Serial no. where both Union & State can Collect Tax and Make laws:-

Entry Sl No. 43 Recovery in a state of claims in respect of taxes and other public demands, including arrears of land revenue and sums recoverable as such arrears, arising outside that State.

Entry Sl 44 Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.

Entry Sl 47 Fees in respect of any of the matters in this List, but not including fees taken in any court.

Now we will discuss about Direct and Indirect Taxes:-

Direct Taxes: A direct tax is a tax an individual or organization pays directly to the imposing entity. A taxpayer, pays direct taxes to the government for different purposes like income tax, Minimum Alternative Tax (MAT), Dividend Distribution Tax (DDT), Securities Transaction Tax (STT)

Income Tax : (Entry Serial No. 82 of the Union list)

Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction.

Corporation Tax

Companies and business organizations in India Companies, both private and public which are registered in India under the Companies Act 1956 are liable to pay Income Tax to be known as corporation tax.

Indirect Taxes

The entries in three lists for collection and levy of indirect taxes by the Central government are mentioned in the Union list.

Custom Duties (Entry Sl No. 83) of the Union list and Custom laws and authority drawn from the constitution. Entry Sl No. 83 of the Union list provides for the levy and collection of duties of customs including export duties

Goods and Services Tax (Entry Sl No. 92 C)

The single GST subsumed several taxes and levies, which included central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi. Other levies which were applicable on inter-state transportation of goods have also been done away with in GST regime.

Other Taxes like

Property Tax

Tax power vested in the states and it is delegated by law to the local bodies, Property Tax, also sometimes known as House Tax, by the municipal authorities like panchayat, municipality or municipal corporation. It is used for maintenance and upkeep of the local civic amenities of the area, like roads, sewage system, lighting, parks, and other infrastructure facilities.

Distribution of Revenue Between Union and State as follows:-

Article 268: Duties levied by the Union but collected and appropriated by the state

Article 269: Tax levied and collected by the Union but assigned to the state

Article 269A: Levy and Collection of GST for Inter-State Supply

Article 270: Taxes levied and distributed between the Union and the States

Article 271: Surcharges Parliament can at any time levy the surcharges on taxes and duties referred to in Articles 269 and 270. This includes cesses of different kinds. The proceeds of such surcharges go to the Centre exclusively and states have no share in them.

Concluding remarks

Whoever the collecting Authority Union or State or both as per Chanakya ‘Collect taxes from citizens like a Bee collects Honey from the flowers - quietly without inflicting pain.’

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