What is Article 270 of Indian Constitution – Defination & Meaning

Article 270: Taxes levied and distributed between the Union and the States (1) All taxes and duties referred to in the Union List, except the duties and taxes
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Article Number

270

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Part XII – Finance, Property, Contracts and Suits

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Bare Acts Text

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

  • (1) All taxes and duties referred to in the Union List, except the duties and taxes referred to in articles 268 and 269, respectively, surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2).
  • (2) Such percentage, as may be prescribed, of the net proceeds of any such tax or duty in any financial year shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that tax or duty is leviable in that year, and shall be distributed among those States in such manner and from such time as may be prescribed in the manner provided in clause (3).
  • (3) In this article, “prescribed” means, —
    • (i) until a Finance Commission has been constituted, prescribed by the President by order, and
    • (ii) after a Finance Commission has been constituted, prescribed by the President by order after considering the recommendations of the Finance Commission.
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Full Definition & Explanation

Article 270 of the Indian Constitution plays a key role in how taxes are managed between the Union government and the states. This article mandates that certain taxes and duties, specified in the Union List, must be collected by the Government of India. However, it also allows for a portion of these tax proceeds to be shared with the states. The distribution process is defined in a way that helps ensure states receive their fair share based on the specific taxes collected within their territories during a financial year. The article also lists exceptions to this tax-sharing arrangement. For example, taxes and duties mentioned in Articles 268 and 269 are not included. These articles deal with the duties and taxes that are levied by the states but collected by the Union. Also, any surcharges and cesses for specific purposes are also excluded from this distribution. This framework affects how states fund their budgets, as they rely on these shared revenues to implement various public services and development programs. Real-world implications of Article 270 are major. It helps maintain a system of fiscal federalism, ensuring that states can finance their responsibilities. For instance, when a state develops infrastructure like roads or schools, the funds shared through this article can be key. As the financial needs of states vary, the article allows for adjustments based on the recommendations of the Finance Commission, ensuring that the distribution can be tailored to meet changing economic conditions.

Historical Context

This article mandates that certain taxes and duties, specified in the Union List, must be collected by the Government of India. However, it also allows for a portion of these tax proceeds to be shared with the states. The distribution process is defined in a way that helps ensure states receive their fair share based on the specific taxes collected within their territories during a financial year. The article also lists exceptions to this tax-sharing arrangement. Article 270 of the Indian Constitution plays a key role in how taxes are managed between the Union government and the states. For example, taxes and duties mentioned in Articles 268 and 269 are not included.

Key Features

– Article 270 pertains to tax distribution between the Union and the States.
– It specifies taxes collected by the Government of India under the Union List.
– Certain taxes, such as those in Articles 268 and 269, are excluded from this article.
– The article allows states to receive a share of tax revenues collected.
– The Finance Commission plays a role in determining the distribution of these revenues.

Importance & Impact

– This article promotes financial cooperation between the Union and states.
– It ensures states receive funding for public services and development projects.
– The distribution of taxes helps maintain fiscal balance among states.
– States can tailor spending based on their individual needs and priorities.
– The involvement of the Finance Commission allows for periodic assessments.

Sample UPSC Question

Which of the following statements about Article 270 is correct? A) It deals only with state taxes. B) It allows the Union to collect and distribute certain taxes. C) It has been significantly amended since 1950. D) The Finance Commission cannot influence tax distribution. Choose the correct option.? Analyze these options carefully in light of the constitutional distribution of legislative and executive powers.

Answer

The correct answer is B. Article 270 allows the Union government to collect certain taxes and distribute a portion of them to the states, promoting fiscal cooperation. Article 270 of the Indian Constitution plays a key role in how taxes are managed between the Union government and the states.

Key Takeaways

✓ Article 270 deals with tax distribution between Union and states.
✓ States receive a share of revenues from specific taxes collected.
✓ The President initially prescribes the distribution percentages
✓ The Finance Commission assesses and recommends adjustments periodically.
✓ Certain taxes are excluded, ensuring focused revenue sharing.

FAQs

Article 270 of the Indian Constitution plays a key role in how taxes are managed between the Union government and the states. This article mandates that certain taxes and duties, specified in the Union List, must be collected by the Government of India. However, it also allows for a portion of these tax proceeds to be shared with the states.

These articles deal with the duties and taxes that are levied by the states but collected by the Union. Also, any surcharges and cesses for specific purposes are also excluded from this distribution. This framework affects how states fund their budgets, as they rely on these shared revenues to implement various public services and development programs.

It helps maintain a system of fiscal federalism, ensuring that states can finance their responsibilities. For instance, when a state develops infrastructure like roads or schools, the funds shared through this article can be key. As the financial needs of states vary, the article allows for adjustments based on the recommendations of the Finance Commission, ensuring that the distribution can be tailored to meet changing economic conditions.

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