financial relations between the Central and State governments

 Here's a summary of the provided audio regarding financial relations between the Central and State governments in India, based on various articles of the Constitution:

The discussion covers financial relations between the Central and State governments as outlined in Part XII (12th Part) of the Indian Constitution, specifically from Article 264 to Article 300A.

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Key Articles and their Provisions:

1. Article 264:

   • Defines "Central Finance Commission" as the Finance Commission established under Article 280.

2. Article 265:

   • States that no tax shall be levied or collected in India except by authority of law (i.e., it must be backed by legislation).

3. Article 268:

   • Taxes levied by the Centre, but collected and utilized by the States.

   • Examples:

     • Excise duty on the manufacture of medicinal and toilet preparations.

     • Taxes on policies/exchange of policies (e.g., stamp duties).

4. Article 269:

   • Taxes levied and collected by the Centre, but the proceeds are distributed among the States.

   • Examples:

     • Terminal Taxes: Taxes on goods or passengers carried by railway, sea, or air. (e.g., part of a train ticket fare that crosses state boundaries).

     • Consignment Tax: Tax on the transportation of goods from one state to another (e.g., when an online order is shipped across states).

5. Article 270:

   • Taxes levied and collected by the Centre, and the proceeds are shared between the Centre and the States.

   • Example: Income Tax.

   • Note: A question on this topic was asked in the APPSC Group 1 Prelims on Jan 8, 2023.

6. Article 271:

   • Surcharge levied by the Central Government on certain taxes (like Income Tax or Corporation Tax) is deposited into the Consolidated Fund of India.

   • Surcharge vs. Cess:

     • Both are additional taxes levied on top of existing taxes.

     • Cess is levied for a specific purpose or objective (e.g., Higher Education Cess, Swachh Bharat Cess). The funds collected from cess can only be used for that stated purpose.

     • Surcharge is levied for general revenue purposes. The funds collected from surcharge can be used by the government for any purpose.

     • Surcharge can also be levied to recover unexpected past expenses (e.g., to cover costs from the Kargil War).

     • Both Centre and States can levy Surcharge and Cess. Article 271 specifically refers to Central Surcharge.

7. Article 272:

   • This article has been deleted from the Constitution.

8. Article 273:

   • Special provision for Assam, West Bengal, Bihar, and Orissa (Odisha) states.

   • Instead of the export duty (tax) on jute and jute products (which was previously collected by the Centre), the Centre must provide an annual grant (financial aid that does not need to be repaid) to these states.

9. Article 274:

   • Requires the President's prior recommendation for any bill (in Parliament) that seeks to:

     • Levy or vary any tax in which states are interested.

     • Affect any tax in which states are interested, if it varies or affects any distribution of tax revenue among states.

   • Essentially, if Central legislation regarding taxes affects the interests/revenues of State governments, the President's prior approval is mandatory before introducing the bill in Parliament.

10. Article 275:

    • Deals with Grants-in-Aid from the Union to certain states.

    • Grants are funds provided by the Centre to states that do not need to be repaid. They are also known as Grant-in-aid.

    • Purposes for which the Centre generally provides grants:

      • Development of backward areas.

      • Development and welfare of Scheduled Castes (SC) and Scheduled Tribes (ST).

      • Management of natural disasters.

      • Development of local bodies (Panchayats and Municipalities).

      • Covering revenue deficits of states.

      • Other general necessities/needs.

11. Article 276:

    • Authorizes states to levy a Professional Tax (PT) on professions, trades, callings, and employments.

    • The maximum amount that can be levied as professional tax in a year shall not exceed ₹2,500.

    • This tax is typically deducted monthly from the salaries of government and private employees (e.g., ₹200 per month).