Indian Constitution Articles (Financial Relations - Centre-State)
Article 277: Exemptions (మినహాయింపులు)
Provision: When the Indian Constitution came into force, if a State Government, Municipality, or any Local Body (Urban Bodies like Municipalities or Panchayat Raj Bodies) was levying a tax, they could continue to do so.
Exception: Even if the subject of that tax is later included in the Union List (Central List) for Parliament to legislate upon, the State/Local Body can continue to levy and collect the tax until the Parliament makes a specific law concerning that tax.
Article 278: Deleted
Status: This article has been deleted from the Constitution.
Article 279: Definition of "Net Income" (నిఖర ఆదాయము)
Definition: "Net Income" means the revenue collected from taxes minus the expenses incurred in the collection of those taxes.
Example: If ₹200 is collected in taxes and ₹100 is spent on collection, the net income is ₹100.
Article 280: Central Finance Commission (కేంద్ర ఆర్థిక సంఘం)
Provision: The President of India is empowered to establish the Central Finance Commission.
Note: This is a constitutional body, and its functions are crucial for Centre-State financial relations.
Article 281: Central Finance Commission Report (నివేదిక)
Provision: The Central Finance Commission submits its report to the President (for Union-related matters).
Parliamentary Procedure: The President then places this report before both Houses of Parliament.
State-level: For State-related matters, the report is submitted to the respective State Governor, who then places it before the State Legislature.
Article 282: Discretionary Grants/Funds (విచక్షణ నిధులు)
Provision: The Central Government can provide financial grants/funds to states based on its discretion, for any purpose deemed fit.
Purpose: These funds can be for backward area development, special programs, welfare of SC/ST, covering revenue deficits, or dealing with natural calamities.
Current Mechanism: Currently, these grants are provided based on the recommendations of NITI Aayog.
Historical Context: Previously, these grants were provided based on the advice of the Planning Commission.
Article 283: Custody of Consolidated Funds, Contingency Funds, and Public Accounts
Central Funds:
Consolidated Fund of India (కేంద్ర సంఘటిత నిధి): This is the primary fund where all Central government revenues (taxes, non-tax revenues, loan recoveries) are deposited, and all expenses are met.
Contingency Fund of India (కేంద్ర అసంఘటిత నిధి): An imprest fund to meet unforeseen expenditures.
Public Account of India (భారత ప్రజా ఖాతా): For transactions where the government acts as a banker (e.g., provident funds, small savings).
Parliament's Control: Parliament has the ultimate power to legislate on the deposit, withdrawal, and custody of these funds.
President's Control: Until Parliament enacts such laws, the President has control over these funds.
State Funds:
State Consolidated Fund (రాష్ట్ర సంఘటిత నిధి): State equivalent of the Central Consolidated Fund.
State Contingency Fund (రాష్ట్ర అసంఘటిత నిధి): State equivalent of the Central Contingency Fund.
State Public Account (రాష్ట్ర ప్రజా ఖాతా): State equivalent of the Central Public Account.
State Legislature's Control: The State Legislature has the ultimate power to legislate on the deposit, withdrawal, and custody of these state funds.
Governor's Control: Until the State Legislature enacts such laws, the Governor has control over these state funds.
Article 284: Custody of Monies other than those Credited to the Consolidated Fund
Central Public Account: The Central Public Account is distinct from the Consolidated Fund and Contingency Fund. Parliament has control over it.
State Public Account: The State Public Account is distinct from the State Consolidated Fund and State Contingency Fund. The State Legislature has control over it.
Article 285: Exemption of Union Property from State Taxation
Provision: Property owned by the Central Government within a State cannot be taxed by the State Government or any local government authority within that State.
Example: An RBI office or CAG office (Central Government property) located in Hyderabad cannot be subjected to property tax by the Telangana State Government or Hyderabad Municipal Corporation.
Article 286: Restrictions on States Regarding Tax on Sale/Purchase of Goods and Import/Export
Provision: State Governments cannot levy taxes on:
The sale or purchase of goods that takes place outside the State.
The sale or purchase of goods that takes place in the course of import into or export out of the territory of India (i.e., customs duty cannot be levied by states).
Article 287: Exemption of Union Electricity from State Taxation
Provision: State Governments cannot levy taxes on electricity that is consumed by the Central Government for the purpose of running railways. This applies regardless of whether the electricity is generated by the State or Central government.
Article 288: Exemption for Water/Electricity from Inter-State River Authorities
Provision: If an authority is constituted by Parliament for the regulation, development, or distribution of water from an inter-state river, the State cannot levy taxes on the water or electricity consumed by that authority.
Article 289: Exemption of State Property from Union Taxation
Provision: Property owned by a State Government cannot be taxed by the Central Government. This immunity extends to State-owned authorities as well.
Example: Property of a State Government in a Union Territory (like Delhi) cannot be taxed by the Central Government.
Article 290: Adjustments in Respect of Certain Expenses and Pensions
Provision: This article deals with the allocation of responsibility for certain expenses and pensions related to services rendered before the commencement of the Constitution, particularly under the British Indian Union.
Allocation: If the official's service falls under the domain of the Central List, the Central Government is responsible for their pensions/salaries. If it falls under the State List, the State Government is responsible. (Analogous to the allocation of employees during state reorganizations).
Article 291: Deleted
Status: This article has been deleted from the Constitution.
Article 292: Borrowing by the Government of India
Provision: The Central Government can borrow money both within India (domestic) and from outside India (international).
Security: To secure these borrowings, the Central Government can pledge its Consolidated Fund of India as collateral.
Article 293: Borrowing by States
Provision: State Governments can borrow money only within India.
Security: States must pledge their State Consolidated Fund as collateral for these borrowings.
External Borrowing: States can borrow from outside India only if they obtain the prior consent of the Central Government.
Article 294: Succession to Property, Assets, Rights, Liabilities, and Obligations in Certain Cases
Context: This article deals with the succession of property, assets, rights, liabilities, and obligations of the former British Indian Union and princely states after the commencement of the Constitution.
Central: Any property/assets within the territory of India that was owned by the British Indian Union before the Constitution came into force, now belongs to the Central Government.
State: Any property/assets within the territory of a particular State that was owned by a former princely state (or provincial government) before the Constitution came into force, now belongs to that respective State.
Article 295: Succession to Property, Assets, Rights, Liabilities, and Obligations in Other Cases (Part B States)
Context: This article specifically deals with the succession of property, assets, rights, liabilities, and obligations related to former "Part B States" (large princely states that acceded to India).
Provision: If any territory that was part of a "Part B State" became part of India, then:
Any property/assets of that former princely state that were located within the territory now under Central control would pass to the Central Government.
Any property/assets of that former princely state that were located within the territory now forming a State would pass to that respective State.
Agreement: However, if there was an agreement between the Central Government and the respective State Government regarding the distribution of these assets, then those assets would be distributed as per the agreement.
Example: Hyderabad was a Part B State. Its assets were transferred to the Central Government or the new Hyderabad State (later Andhra Pradesh/Telangana) as per agreements.
Article 296: Escheat, Lapse or Bona Vacantia
Provision: After the commencement of the Constitution, any property that would have escheated (reverted to the Crown due to lack of legal heirs) or lapsed (reverted due to non-fulfillment of conditions), or been considered bona vacantia (ownerless property) – would now belong to the respective government.
Central: If the property is within the territory of India and its subject matter falls under the Union List, it vests with the Central Government.
State: If the property is within the territory of a State and its subject matter falls under the State List, it vests with the State Government.
Article 297: Things of Value within Territorial Waters or Continental Shelf
Provision: All lands, minerals, and other things of value (resources) underlying the ocean within:
Territorial Waters (12 nautical miles from baseline): The sovereignty of India extends to its territorial waters, and everything within this zone belongs to India. (1 nautical mile = 1.852 km).
Continental Shelf (beyond territorial waters, where the landmass extends under the sea):
Exclusive Economic Zone (EEZ - 200 nautical miles from baseline): India has sovereign rights for exploration and exploitation of resources here.
Ownership: All these resources within the above three zones belong to the Central Government.
Article 298: Power to Carry on Trade, etc.
Provision: Both the Union (Central Government) and States have the power to carry on any trade or business, and to acquire, hold, and dispose of property.
Territorial Limit:
The Union's power extends throughout India.
A State's power to carry on trade/business extends within its own territory.
Article 299: Contracts
Provision: All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorize.
Article 300: Suits and Proceedings
Provision: This article enables both the Central Government and State Governments to sue or be sued.
Parties:
The Government of India may sue or be sued by the name of the Union of India.
The Government of a State may sue or be sued by the name of the State.
Liability: Both the Union and States are liable in respect of their contracts and actions, similar to the liability of the former Dominion of India and the Provinces.
Article 300A: Persons not to be Deprived of Property Save by Authority of Law
Provision: "No person shall be deprived of his property save by authority of law."
Historical Context: This was originally Article 31 (Right to Property), a Fundamental Right.
Amendment: It was removed from Part III (Fundamental Rights) and inserted as Article 300A in Part XII (Finance, Property, Contracts, and Suits) by the 44th Constitutional Amendment Act, 1978.
Current Status: It changed the "Right to Property" from a Fundamental Right to a Legal Right.
