Distribution of taxing powers
Note
Revenue-elastic taxes are concentrated at the Centre while expenditure obligations fall heavily on States, and that vertical fiscal imbalance is the structural problem the constitutional allocation of taxing powers produces. Parliament and State Legislatures draw their tax authority from Articles 246, 248, and 265 read with the Seventh Schedule's Union List (List I), State List (List II), and Concurrent List (List III). Residuary taxing power vests in Parliament under Entry 97 of List I. The Constitution (101st Amendment) Act, 2016 inserted Article 246A, assigning concurrent GST jurisdiction to both Parliament and State Legislatures. Article 280 mandates a Finance Commission to recommend devolution and grants-in-aid that bridge the gap between centralised revenue and state-level spending needs. The GST Council's internal rate-setting architecture is treated separately.
In the news
Questions on this topic
Consider the following pairs regarding legislative entries under the Seventh Schedule of the Constitution of India and their scope:
- Entry 54, State List — Empowers states to tax the sale or purchase of goods (now narrowed to specified goods after the 101st Constitutional Amendment)
- Entry 82, Union List — Empowers Parliament to levy taxes on income other than agricultural income
- Entry 92A, Union List — Empowers Parliament to levy taxes on the sale or purchase of goods in the course of inter-state trade or commerce
Which of the pairs given above is/are correctly matched?
Explanation
All three pairs are correctly matched. Entry 54 of the State List vests in state legislatures the power to tax sale or purchase of goods; this broad power was significantly narrowed by the 101st Constitutional Amendment (2016), which introduced GST and restricted Entry 54 to only specified goods (such as petroleum crude, high-speed diesel, petrol, natural gas, aviation turbine fuel, and alcoholic liquor for human consumption). Entry 82 of the Union List gives Parliament the exclusive power to tax income other than agricultural income — the distinction between agricultural and non-agricultural income being a classic constitutional allocation of taxing competence. Entry 92A, inserted by the 46th Constitutional Amendment (1982), gives Parliament the power to tax sale or purchase of goods in the course of inter-state trade or commerce, which is the constitutional foundation for the Central Sales Tax Act — a power distinct from the states' intra-state sales tax power under Entry 54. Understanding how the GST reform (101st Amendment) restructured Entry 54 is directly relevant because surcharge disputes over old sales tax laws, as settled by the Supreme Court's recent Constitution Bench, have little prospective significance precisely because Entry 54's breadth has been curtailed.
Your record on this topic
Sign in to see how many of these you have answered, which ones you got wrong, and to practise this topic on its own.
Sign in →