What is Article 274 of Indian Constitution – Defination & Meaning

Article 274: Prior recommendation of President required to Bills affecting taxation in which States are interested (1) No Bill or amendment which imposes or
📅 Part XII – Finance, Property, Contracts and Suits
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Article Number

274

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Part XII – Finance, Property, Contracts and Suits

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Bare Acts Text

Article 274: Prior recommendation of President required to Bills affecting taxation in which States are interested

  • (1) No Bill or amendment which imposes or varies any tax or duty in which States are interested, or which varies the meaning of the expression “agricultural income” as defined for the purposes of the enactments relating to Indian income-tax, or which affects the principles on which under any of the foregoing provisions of this Chapter moneys are or may be distributable to States, or which imposes any such surcharge for the purposes of the Union as is mentioned in the foregoing provisions of this Chapter, shall be introduced or moved in either House of Parliament except on the recommendation of the President.
  • (2) In this article, the expression “tax or duty in which States are interested” means —
    • (a) a tax or duty the whole or part of the net proceeds whereof are assigned to any State; or
    • (b) a tax or duty by reference to the net proceeds whereof sums are for the time being payable out of the Consolidated Fund of India to any State.
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Full Definition & Explanation

Article 274 of the Indian Constitution plays a key role in the legislative process concerning taxation. It mandates that any bill or amendment that introduces or changes a tax, especially one that affects states, must first be approved by the President of India. This requirement ensures that states have a voice in matters that impact their revenue and financial interests. For instance, if Parliament seeks to change the definition of “agricultural income” for tax purposes, the President’s recommendation is necessary. This prevents the central government from unilaterally imposing tax changes that could burden states financially. The article specifically targets taxes where states have a financial stake. For example, if a tax’s proceeds are shared with states or influence funds allocated to them, this article applies. This provision protects the fiscal autonomy of states and upholds the federal structure of governance. It means that states must be consulted, fostering cooperation between the central and state governments. This is key for maintaining harmonious relations and ensuring that states do not face unexpected financial strains. In practical terms, if the central government wishes to introduce a new tax or change existing ones that affect states, it must first seek the President’s recommendation. This adds a layer of scrutiny and ensures that state interests are considered. The involvement of the President acts as a check on the central government, promoting accountability and transparency in financial legislation. This not only affects the financial landscape but also encourages collaboration among different levels of government, ultimately benefiting citizens by creating a more balanced approach to taxation.

Historical Context

Article 274 was included in the Constitution during its framing in 1949. It was designed to ensure cooperation between the Union and the states concerning taxation matters. Over the years, amendments have clarified its provisions, especially concerning what constitutes taxes of interest to states. The Supreme Court, in cases like State of West Bengal v. Union of India, has upheld the importance of this article in maintaining the federal structure. Such cases highlight the need for state participation in tax-related decisions.

Key Features

– The article requires President’s recommendation for certain tax-related bills.
– It applies to taxes affecting state revenues or financial interests.
– Changes to agricultural income definitions also need the President’s approval.
– It ensures states have a say in financial decisions impacting them.
– The article promotes federal cooperation and accountability in governance.

Importance & Impact

– States must be consulted before any tax bill is introduced.
– The President acts as a mediator between the Union and states.
– This article protects states from sudden financial burdens
– It fosters better cooperation between different levels of government
– Public interests are safeguarded through legislative checks and balances

Sample UPSC Question

Consider the following statements regarding Article 274 of the Indian Constitution: 1. It mandates the President’s recommendation for tax-related bills affecting states. 2. It applies to all types of taxes without exception. 3. It promotes federal cooperation in financial matters. Which of the statements is/are correct? A) 1 only B) 1 and 3 only C) 1 and 2 only D) 1, 2, and 3

Answer

The correct answer is B) 1 and 3 only. Statement 1 is true as it requires the President’s recommendation for specific tax bills. Statement 3 is also correct as it fosters cooperation between the Union and states. Statement 2 is incorrect since it does not apply to all tax types.

Key Takeaways

✓ Article 274 needs President’s approval for tax-related bills.
✓ It focuses on taxes affecting state finances
✓ States must be consulted before tax changes occur.
✓ The article ensures accountability in financial legislation
✓ It encourages cooperation between Union and state governments.

FAQs

Article 274 of the Indian Constitution plays a key role in the legislative process concerning taxation. It mandates that any bill or amendment that introduces or changes a tax, especially one that affects states, must first be approved by the President of India. This requirement ensures that states have a voice in matters that impact their revenue and financial interests.

This provision protects the fiscal autonomy of states and upholds the federal structure of governance. It means that states must be consulted, fostering cooperation between the central and state governments. This is key for maintaining harmonious relations and ensuring that states do not face unexpected financial strains. Article 274 of the Indian Constitution plays a key role in the legislative process concerning taxation.

This adds a layer of scrutiny and ensures that state interests are considered. The involvement of the President acts as a check on the central government, promoting accountability and transparency in financial legislation. This not only affects the financial landscape but also encourages collaboration among different levels of government, ultimately benefiting citizens by creating a more balanced approach to taxation.

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