Actual Article
Article 271: Surcharge on certain duties and taxes for purposes of the Union
Notwithstanding anything in the foregoing provisions of this Chapter, Parliament may at any time increase any of the duties or taxes referred to in the foregoing provisions of this Chapter by a surcharge for purposes of the Union, and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.
UPSC Notes for Article 271
Explanation:
- Surcharge Authority: Article 271 empowers Parliament to impose a surcharge on certain duties and taxes for Union purposes. This surcharge can be added to existing duties and taxes as needed.
- Proceeds to Consolidated Fund: The entire proceeds from the surcharge are credited to the Consolidated Fund of India, meaning they are solely for the use of the Union Government.
Key Points:
- Additional Revenue for Union: This article provides a mechanism for the Union Government to raise additional revenue through surcharges when required.
- Exclusive Use by Union: The proceeds from these surcharges are not shared with the States but are retained by the Union Government for its purposes.
- Flexibility in Taxation: Article 271 allows Parliament to respond to financial needs by increasing revenue without creating new taxes, thus providing flexibility in fiscal management.
Important Cases and Commissions Related to Article 271
Cases:
- No specific landmark cases directly interpreting Article 271, as it deals primarily with the imposition of surcharges and fiscal policies decided by Parliament.
Commissions:
- Finance Commission: Although its primary role is to recommend the distribution of revenues between the Union and the States, it may consider the implications of surcharges under Article 271 in its overall assessment of fiscal resources.
- Taxation Enquiry Commission: May review the impact of surcharges on the economy and suggest measures for effective fiscal management.
Important Reports Related to Article 271:
- Finance Commission Reports: Analyze the overall fiscal health of the Union and the States, and while primarily focused on revenue distribution, they provide context for understanding the role of surcharges in fiscal policy.
Previous Year Prelims Questions Related to Article 271
- (UPSC Prelims 2016) What does Article 271 of the Indian Constitution empower Parliament to do?
- A. Levy income tax
- B. Increase duties or taxes by a surcharge for Union purposes
- C. Distribute taxes between the Union and States
- D. Allocate funds for States Correct Answer: B. Increase duties or taxes by a surcharge for Union purposes
- (UPSC Prelims 2018) Where do the proceeds of the surcharge imposed under Article 271 go?
- A. Consolidated Fund of the States
- B. Contingency Fund of India
- C. Consolidated Fund of India
- D. Public Account of India Correct Answer: C. Consolidated Fund of India
Previous Year Mains Questions Related to Article 271
- Mains 2016: “Discuss the significance of Article 271 in the context of fiscal policy in India. How does the provision for surcharges help the Union Government manage its finances?”
- Mains 2019: “Evaluate the impact of surcharges under Article 271 on the financial autonomy of the States. What are the implications for fiscal federalism?”
Additional Insights:
- Financial Flexibility: Article 271 provides financial flexibility to the Union Government, enabling it to meet unforeseen expenditures or specific financial needs without altering the overall tax structure.
- Impact on States: While surcharges are beneficial for the Union, they may affect the overall tax burden on citizens and the fiscal autonomy of States, highlighting the need for balanced fiscal policies.
Understanding Article 271 is crucial for UPSC aspirants as it provides insights into the mechanisms for raising additional revenue for the Union Government, emphasizing the importance of flexible fiscal policies and the impact on fiscal federalism. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the financial provisions and revenue mechanisms within the Indian Constitution.