Actual Article
Article 276: Taxes on professions, trades, callings, and employments
- 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.
- 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 two thousand and five hundred rupees per annum:
- Provided that if in the financial year immediately preceding the commencement of this Constitution there was in force in any State or any such municipality, board, or authority a law relating to taxes on professions, trades, callings, and employments, the provisions of this clause shall not apply to that law until the thirty-first day of March 1951, and the law in force may continue to have effect until that day as if this Constitution had not been brought into operation.
- The power of the Legislature of a State to make laws as mentioned in this article shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on professions, trades, callings, and employments levied by a municipality, district board, local board, or other local authority within a State.
UPSC Notes for Article 276
Explanation:
- State Authority on Profession Tax: Clause (1) asserts that State laws imposing taxes on professions, trades, callings, or employments are valid even if they relate to taxes on income, ensuring that States and local bodies can levy such taxes.
- Ceiling on Tax Amount: Clause (2) sets a limit on the total amount payable by any one person in respect of such taxes to not exceed ₹2,500 per annum. There is a proviso allowing pre-existing laws to continue until March 31, 1951.
- Non-Limitation on Parliament’s Power: Clause (3) clarifies that the State’s power to make such laws does not limit Parliament’s power to legislate on these taxes, emphasizing the concurrent jurisdiction.
Key Points:
- Revenue for Local Bodies: Article 276 provides a significant source of revenue for States and local authorities through the imposition of profession taxes.
- Constitutional Validity: The article ensures that these taxes are constitutionally valid, preventing disputes about their legality.
- Concurrent Powers: Both the State Legislatures and Parliament have the power to legislate on these taxes, promoting flexibility and cooperation in taxation.
Important Cases and Commissions Related to Article 276
Cases:
- Sudhir Chandra Nawn vs. Wealth Tax Officer (1968): The Supreme Court upheld the validity of profession tax laws enacted by State Legislatures, reiterating the principles of Article 276.
- R.R. Engineering Company vs. Zila Parishad, Bareilly (1980): The Supreme Court interpreted the scope and limits of the profession tax under Article 276.
Commissions:
- Finance Commission: Reviews and makes recommendations on the distribution of financial resources, including revenues from profession taxes.
- State Finance Commissions: Provide recommendations for strengthening local finances, including the role of profession taxes.
Important Reports Related to Article 276:
- Finance Commission Reports: Analyze the impact of profession taxes on local finances and provide recommendations for improving the tax framework.
- State Finance Commission Reports: Discuss the implementation and collection of profession taxes by local authorities and recommend measures for enhancing revenue generation.
Previous Year Prelims Questions Related to Article 276
- (UPSC Prelims 2016) What does Article 276 of the Indian Constitution pertain to?
- A. Taxes on agricultural income
- B. Taxes on professions, trades, callings, and employments
- C. State List subjects
- D. Financial emergency provisions Correct Answer: B. Taxes on professions, trades, callings, and employments
- (UPSC Prelims 2018) What is the maximum amount payable in respect of profession tax as per Article 276?
- A. ₹1,000 per annum
- B. ₹2,000 per annum
- C. ₹2,500 per annum
- D. ₹5,000 per annum Correct Answer: C. ₹2,500 per annum
Previous Year Mains Questions Related to Article 276
- Mains 2016: “Discuss the significance of Article 276 in providing revenue to States and local bodies through taxes on professions, trades, callings, and employments. How does this article ensure the constitutionality of such taxes?”
- Mains 2019: “Evaluate the impact of the ceiling on profession tax as stipulated in Article 276. What are the advantages and challenges associated with this ceiling for State and local finances?”
Additional Insights:
- Revenue Generation: Article 276 is crucial for generating revenue at the State and local levels, helping to finance essential services and infrastructure.
- Flexibility in Taxation: The concurrent power to legislate on profession taxes allows both the Union and State governments to address specific financial needs and circumstances, promoting flexible and responsive taxation policies.
Understanding Article 276 is crucial for UPSC aspirants as it provides insights into the mechanisms for levying taxes on professions, trades, callings, and employments, emphasizing the importance of revenue generation for local and State governments. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the financial provisions and tax mechanisms within the Indian Constitution.