What is Article 268 of Indian Constitution – Defination & Meaning

Article 268: Duties levied by the Union but collected and appropriated by the States (1) Such stamp duties and such duties of excise on medicinal and toilet
📅 Part XII – Finance, Property, Contracts and Suits
🏷️Active

📚 UPSC Relevant

Article Number

268

part

Part XII – Finance, Property, Contracts and Suits

Status

Active

Bare Acts Text

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

  • (1) Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected,—
    • (a) in the case where such duties are leviable within any Union territory, by the Government of India, and
    • (b) in other cases, by the States within which such duties are respectively leviable.
  • (2) The proceeds in any financial year of any such duty leviable within any State shall not form part of the Consolidated Fund of India, but shall be assigned to that State.
READ ALSO  What is Article 113 of Indian Constitution - Defination & Meaning

Full Definition & Explanation

Article 268 of the Indian Constitution deals with certain duties that the Union government can impose, but the collection and allocation of these duties are designated to the states. Specifically, this article addresses stamp duties and excise duties on medicinal and toilet preparations. When these duties are applicable in a Union territory, the Union government collects the revenue. However, in all other cases, the respective states are responsible for collecting these duties. This division of responsibility allows states to have a source of revenue that is directly tied to their jurisdiction. This article impacts both the Union and state governments. For states, it provides a steady revenue stream from stamp duties and excise taxes, which can be used for local development projects and public services. The revenue collected does not contribute to the Consolidated Fund of India, meaning it is entirely assigned to the state collecting it. This distinction makes states more financially autonomous, allowing them to manage their financial affairs more effectively and address local needs. Also, the article highlights the cooperative federalism structure in India, where both the Union and states have specific roles. It also raises questions about the efficacy of tax collection and the equitable distribution of resources among states. For instance, states may compete to attract businesses that generate more revenue through these duties. The real-world implications can be seen in how states manage tax policy and public expenditure, directly affecting citizens’ welfare and development outcomes.

Historical Context

Article 268 was included in the Constitution during its adoption in 1950, reflecting the need for a clear framework for taxation responsibilities among different levels of government. The Constituent Assembly debates emphasized the importance of allowing states to have their own sources of revenue, fostering autonomy. While there have not been major amendments to this article, ongoing discussions about fiscal federalism keep it relevant. The Supreme Court has addressed related issues in landmark cases, ensuring clarity on the scope of state powers in revenue collection.

Key Features

– Stamp duties and excise duties are specified in the Union List.
– Duties are levied by the Union but collected by the respective states.
– The Union government is responsible for collecting duties in Union territories.
– The proceeds do not go to the Consolidated Fund of India.
– Revenue collected is assigned entirely to the state that collects it.

Importance & Impact

– States can utilize revenue from stamp duties for various local projects and services.
– This article enhances fiscal autonomy, enabling states to manage their revenue effectively.
– It encourages states to improve their tax collection methods and efficiency.
– The arrangement promotes cooperative federalism, allowing shared governance between Union and states.
– States can effectively address local development needs using the revenue they generate.

Sample UPSC Question

Consider the following statements regarding Article 268 of the Indian Constitution: 1. It enables the Union government to levy certain duties while states collect and utilize them. 2. The funds generated from these duties are included in the Consolidated Fund of India. Which of the statements is/are correct? A) Only 1 is correct. B) Only 2 is correct. C) Both 1 and 2 are correct. D) Neither 1 nor 2 is correct.

Answer

The correct answer is A) Only 1. Article 268 allows the Union to levy specific duties, but the revenue does not contribute to the Consolidated Fund, making statement 2 incorrect. This structure supports state revenue autonomy. Article 268 of the Indian Constitution deals with certain duties that the Union government can impose, but the collection and allocation of these duties are designated to the states.

Key Takeaways

✓ Article 268 enables states to collect specific duties from revenues.
✓ The duties covered include stamp and excise on certain products.
✓ Revenue collected by states is not part of central funds.
✓ Union territories have defined procedures for duty collection.
✓ This article promotes a balanced approach to federal financial relationships.

FAQs

Article 268 of the Indian Constitution deals with certain duties that the Union government can impose, but the collection and allocation of these duties are designated to the states. Specifically, this article addresses stamp duties and excise duties on medicinal and toilet preparations. When these duties are applicable in a Union territory, the Union government collects the revenue.

For states, it provides a steady revenue stream from stamp duties and excise taxes, which can be used for local development projects and public services. The revenue collected does not contribute to the Consolidated Fund of India, meaning it is entirely assigned to the state collecting it. This distinction makes states more financially autonomous, allowing them to manage their financial affairs more effectively and address local needs.

It also raises questions about the efficacy of tax collection and the equitable distribution of resources among states. For instance, states may compete to attract businesses that generate more revenue through these duties. The real-world implications can be seen in how states manage tax policy and public expenditure, directly affecting citizens’ welfare and development outcomes.

Related Articles

Picture of Editor-in-Chief Pramod

Editor-in-Chief Pramod

Founder and Editor-in-Chief at StudyHub. Pramod has spent over 7 years tracking Indian government recruitments and analyzing exam trends. He oversees the StudyHub editorial board, managing a dedicated team of subject-matter experts across History, Polity, Geography, Geology, and General Sciences. His mission is to ensure that every job alert and study resource published on StudyHub is 100% verified, accurate, and helpful for competitive exam aspirants.
Scroll to Top