July 18, 2024
Home » CONSTITUTION PROVISIONS DEALING WITH TAXATION IN INDIA
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AUTHOR- Jonus D’souza, Student of V.M. Salgaocar College of Law, Panaji- Goa.

ABSTRACT

The framework for taxes in India is outlined in several provisions of the Indian Constitution. These provisions define the powers and responsibilities of the central government and state governments in relation to taxation. The Indian Constitution’s taxation provisions are intended to safeguard taxpayer interests while ensuring that the Union and the States have the resources necessary to carry out their respective roles. One of the government’s most significant sources of income is taxes. It is utilized to pay for necessities like infrastructure, healthcare, and education. The Constitution mentions the distribution of legislative powers between the central government and state governments, specifies the types of taxes that can be levied, and sets certain limitations on taxation powers. This Article aims at explaining the various provisions of the Indian Constitution which deal with Taxation.

INTRODUCTION

The Constitution is the foundation and source to legislate all laws in India. All laws are subordinate to the Indian Constitution because the constitution is the supreme law of the land. The Constitution acknowledges the significance of taxes as a way for the government to raise money and fund its expenditures. It seeks to guarantee a just and equitable tax structure that protects citizens rights and interests while fostering social welfare and economic progress. It is important to note that taxation laws are complex and subject to amendments by the legislature and interpretations by the judiciary.

NEED FOR CONSTITUTIONAL PROVISIONS 

Constitutional provision on taxation promotes transparency in the tax system. It ensures that the government provides clear information to the citizens regarding the taxes imposed and the purpose for which they are collected it also specifies the type of taxes that the government may levy. It will aid to avoid any ambiguity or confusion regarding the government’s taxation policies. It will also ensure that the government does not impose arbitrary or excessive taxes on the citizens. 

MEANING OF TAX

The Word Tax is Derived from the Latin word “Taxare” which means to “Assess”. It is a monetary burden imposed upon an individual which aids in adding to the government’s revenue. Hence paying tax is a mandatory provision and not a voluntary one.

CHARACTERISTICS OF A GOOD TAX STRUCTURE

Canons or principles of taxation were propounded by Sir Adam Smith, they are the qualities which a good tax system should possess. A Good Tax System should possess the following essentials:

  1. It should be Equitable.
  2. It should be Effective.
  3. It should be Economical.
  4. It should be Certain.
  5. It should be Convenient.
  6. It should be Simple.
  7. It should be Productive.
  8. It should be Flexible.

TYPES OF TAXES

Taxes levied are divided into 2 Categories:

  1. DIRECT TAXES

These are those taxes which are imposed upon individuals. These taxes are governed by the Central Board of Direct Taxes (CBDT). Some of the examples are, Income Tax, Gift tax, Property Tax.

  • INDIRECT TAXES

These are those taxes which are imposed upon individual through goods and services. These taxes are governed by the Central Board of Indirect Taxes and Customs (CBIC). Some of the examples are, Goods and services Tax (GST), Sales Tax, Securities Transaction Tax (STT).

  DISTRIBUTION OF POWERS OF TAXATION

  1. List 1 in the Seventh Schedule mentions the powers of the Central Government.
  2. List 2 in the Seventh Schedule mentions the powers of the State Government.
  3. List 3 does not deal with of taxation.

CONSTITUIONAL PROVISONS

  1. ARTICLE 265

This Article states that no tax can be imposed unless authorized by law. Law means an act of legislature or a statute law. One essential requisite is that when the law is applied it should not violate any provision of the constitution.

  • ARTICLE 266

      This Article makes provision for the Consolidated and Public accounts of India.

  • ARTICLE 268

This Article mentions that the Union Government will levy the taxes and duties, but it will be collected by the State Government.

  • ARTICLE 269

This Article mentions that the Union Government will levy as well as collect the taxes but the amount will be distributed between the states.

  • ARTICLE 269A

This Article mentions the power of collection of Goods and Service Tax on interstate trade or commerce.

  • ARTICLE 270

 This Article provides that the Union Government will levy as well collect taxes but the amount will be distributed between the Centre and the States.

  • ARTICLE 276

This Article provides that the State Government will levy and govern taxes and the same will also be collected by the State Government.

  • ARTICLE 279

This article gives the definition of “net proceeds” and the procedure for ascertaining the net proceeds of any tax or duty.

  • ARTICLE 280

  This Article mentions the Constitution of a Finance Commission, which shall be bestowed with the duty on giving recommendations on distribution of tax revenues between the Union and the States and amongst the States themselves.

  1. ARTICLE 366

This Article gives the definition of Goods, Services, Taxation, Goods and Service Tax etc.

CASE LAWS

  1. TANGKHUL V. SIMEREI SHAILE

The Supreme Court in this case ruled that the custom of villagers giving the headman Rs. 50 per day in lieu of customarily providing free labour for a day was a tax collection practice that was not permitted by law. It was therefore against Article 265 of the Constitution.

  •  LORD KRISHNA SUGAR MILLS V. UOI

The Supreme Court in this case ruled that the government lacked legal authority to impose additional excise duties on sugar merchants who failed to meet export goals as part of a government-initiated promotion scheme.

CONCLUSION

It can be concluded by citing the importance of role of taxation plays in development of an economy. It is of deep importance that a constitution should contain provisions pertaining to taxes. This establishes the foundation for the government’s ability to impose taxes and such imposition to be fair and transparent.  It helps protects people from unjustified and excessive taxes.


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