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Subject: Polity
Topic: Seventh Schedule and Taxation Powers
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The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Centre and the State. An important restriction on this power is Article 265 of the Constitution which states that “No tax shall be levied or collected except by the authority of law.” Therefore each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature.
Article 246 of the Indian Constitution, distributes legislative powers including taxation, between the Parliament and the State Legislature. Schedule VII (based on Art.246) enumerates these subject matters. Separate heads of taxation are provided under lists I and II . There is no head of taxation in the concurrent List (Union and the States have no concurrent power of taxation). The list of fourteen Union heads of taxation and the list of nineteen State heads are given below:
Parliament
Taxes on income other than agricultural income (List I, Entry 82)
Duties of customs including export duties (List 1, Entry 83)
Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other nareotic drugs and nareotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I, Entry 84)
Corporation Tax (List I, Entry 85)
Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I, Entry 86)
Estate duty in respect of property other than agricultural land (List I, Entry 87)
Duties in respect of succession to property other than agricultural land (List I, Entry 88)
Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I, Entry 89)
Taxes other than stamp duties on transactions in stock exchanges and futures markets (List I, Entry- 90).
Taxes on the sale or purchase of newspapers and on advertisements published therein (List I, Entry 92)
