What is Article 276 of Indian Constitution – Defination & Meaning

Article 276: Taxes on professions, trades, callings and employments (1) Notwithstanding anything in article 246, no law of the Legislature of a State relating
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276

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Part XII – Finance, Property, Contracts and Suits

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Bare Acts Text

Article 276: Taxes on professions, trades, callings and employments

  • (1) Notwithstanding anything in article 246, no law of the Legislature of a State relating to taxes for the benefit of the State or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income.
  • (2) The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed 1 [two thousand and five hundred rupees] per annum.
  • (3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income accruing from or arising out of professions, trades, callings and employments.
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Full Definition & Explanation

Article 276 of the Indian Constitution allows states to impose taxes on professions, trades, callings, and employments. This article is major as it gives state legislatures the power to create laws related to such taxes without violating the federal structure. For example, if a state decides to tax the income of local businesses, it can do so as long as it does not exceed the limit set by this article. This means that every person working in those professions will contribute a small amount to their local government, helping fund services and infrastructure. The article specifically states that the total amount of tax payable by an individual cannot exceed two thousand and five hundred rupees per annum. This limit is key because it prevents excessive taxation on lower-income groups. For instance, a small shop owner or a freelance worker will not face an overwhelming tax burden, allowing them to sustain their livelihood while still contributing to local governance. This balance between taxation and economic viability is a practical approach in a diverse country like India. Also, while Article 276 empowers state legislatures, it does not limit the Parliament’s power to tax income from these professions. This distinction ensures that both state and central governments can operate effectively in their respective jurisdictions. For example, the central government can still impose income tax on higher earnings, while states manage local taxes. This division of tax responsibilities helps maintain a structured economic environment, allowing for both local and national growth.

Historical Context

Article 276 was added to the Constitution during its formation in 1950. The Constituent Assembly debated the need for local taxation powers extensively, ensuring states could fund their governance. It has not been amended since its inception, indicating its importance in the federal structure. The Supreme Court has interpreted this article in various cases, emphasizing that state tax laws should not infringe upon the central government’s power to tax income, thus maintaining a balance in the federal structure. For example, in cases like ‘State of West Bengal vs. Union of India’, the division of tax powers was clarified.

Key Features

– States can impose taxes on professions and trades under Article 276.
– The tax amount for individuals cannot exceed two thousand and five hundred rupees.
– State laws regarding these taxes are valid under the Constitution.
– This article does not limit Parliament’s power to tax income.
– It applies to local authorities like municipalities and district boards.

Importance & Impact

– Local governments can raise funds through taxes on professions and trades.
– Individuals have a clear limit on the maximum tax they can pay.
– This article helps maintain a balanced economic structure and supports local governance.
– It ensures clarity in tax responsibilities between state and central governments.
– States can tailor tax laws to fit local needs and economic conditions.

Sample UPSC Question

Consider the following statements regarding Article 276 of the Indian Constitution: 1. It allows state legislatures to impose taxes on professions and trades. 2. The total tax payable by an individual cannot exceed five thousand rupees. 3. This article limits the Parliament’s power to impose income tax. Which of the statements is/are correct? A) 1 only B) 1 and 2 only C) 1 and 3 only D) 1, 2, and 3. Discuss the implications of these statements on local governance and federal structure.

Answer

The correct answer is A) 1 only. Article 276 allows states to impose taxes on professions and trades, but the maximum limit is two thousand and five hundred rupees, not five thousand. Additionally, it does not restrict the Parliament from imposing income tax, which ensures that both government levels can operate effectively.

Key Takeaways

✓ Article 276 allows state taxation on professions and trades.
✓ Tax limit for individuals is set at two thousand and five hundred rupees.
✓ State laws regarding taxes are valid under this article.
✓ Parliament retains the power to tax income separately.
✓ This article supports local governance and economic stability.

FAQs

Under Article 276, the maximum tax an individual can pay is two thousand and five hundred rupees per year. This limit applies to various professions and trades, ensuring that the tax burden remains manageable for individuals. For instance, a local artisan or a small service provider contributes to local governance without facing an overwhelming financial burden.

No, states cannot impose taxes beyond the two thousand and five hundred rupees limit set by Article 276. This cap is in place to prevent excessive taxation on individuals engaged in various professions. It ensures that local workers and small businesses can thrive without being overburdened by taxes, promoting economic stability in the region.

Article 276 does not limit the Parliament’s power to impose income tax on individuals. While states can tax professions, the central government can tax higher income separately. This division helps maintain a functional relationship between state and central tax systems, ensuring effective governance and financial support for public services at both levels.

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Pramod Pal Founder and Editor-in-Chief

Pramod is the Founder and Editor-in-Chief of StudyHub. He holds a Master's degree and is currently pursuing a Ph.D. in Geology, alongside more than 7+ years spent building and verifying competitive exam content for Indian aspirants. He leads StudyHub's editorial process across Indian Polity, the Constitution, Indian Economy, History, Geography, Science, and the platform's other subject areas — checking every article against primary sources (bare act text and Gazette notifications for constitutional topics, government and Economic Survey data for economy content, standard reference material elsewhere) and flagging it for re-verification whenever a relevant amendment, policy, or data update makes an earlier version outdated.
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