Actual Article
Article 285: Exemption of property of the Union from State taxation
- The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State.
- Nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.
UPSC Notes for Article 285
Explanation:
- Exemption from State Taxes: Clause (1) of Article 285 exempts all property of the Union from any taxes imposed by a State or any authority within a State, unless Parliament enacts a law to the contrary.
- Continuation of Pre-Existing Taxes: Clause (2) allows the continuation of taxes on Union property that were in effect before the commencement of the Constitution until Parliament decides otherwise.
Key Points:
- Union Property Exemption: This article ensures that Union property is generally exempt from state taxation, preserving the financial autonomy of the Union.
- Parliamentary Authority: Parliament holds the power to legislate exceptions to this exemption, providing flexibility in the financial relationship between the Union and the States.
- Transitional Provision: The continuation of pre-existing taxes on Union property allows for a smooth transition until Parliament makes new provisions.
Important Cases and Commissions Related to Article 285
Cases:
- State of West Bengal vs. Union of India (1963): The Supreme Court upheld the principle that Union property is exempt from state taxation, affirming the constitutional provision under Article 285.
- Union of India vs. State of Rajasthan (1984): The case further reinforced the exemption of Union property from state taxes unless specified by Parliament.
Commissions:
- Finance Commission: Reviews and makes recommendations on the distribution of financial resources and the impact of exemptions under Article 285.
- Law Commission of India: May review the implications of such exemptions and recommend necessary legal reforms.
Important Reports Related to Article 285:
- Finance Commission Reports: Analyze the fiscal impact of exemptions provided under Article 285 and recommend measures for balancing Union and State financial interests.
- Law Commission Reports: Discuss the legal framework surrounding the exemption of Union property from state taxation and suggest improvements.
Previous Year Prelims Questions Related to Article 285
- (UPSC Prelims 2016) According to Article 285 of the Indian Constitution, who has the authority to provide exceptions to the exemption of Union property from state taxes?
- A. The President
- B. The Prime Minister
- C. The Parliament
- D. The Supreme Court Correct Answer: C. The Parliament
- (UPSC Prelims 2018) What does Article 285 exempt from state taxation?
- A. Private property
- B. Property of the Union
- C. Property of the States
- D. Property of local authorities Correct Answer: B. Property of the Union
Previous Year Mains Questions Related to Article 285
- Mains 2016: “Discuss the significance of Article 285 in maintaining the financial autonomy of the Union. How does this exemption impact the fiscal relationship between the Union and the States?”
- Mains 2019: “Evaluate the role of Parliament in regulating exceptions to the exemption of Union property from state taxes as provided under Article 285. What are the potential benefits and challenges of this provision?”
Additional Insights:
- Financial Autonomy: Article 285 plays a crucial role in maintaining the financial autonomy of the Union by exempting its property from state taxation.
- Flexibility in Fiscal Policy: The power of Parliament to provide exceptions ensures that there is flexibility in fiscal policy to address specific needs and circumstances.
- Balancing Interests: The continuation of pre-existing taxes on Union property until new legislation is enacted ensures a balance between the Union and State interests during the transitional period.
Understanding Article 285 is crucial for UPSC aspirants as it provides insights into the mechanisms for exempting Union property from state taxation, emphasizing the importance of financial autonomy and flexibility in fiscal policy. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the financial provisions and their impact on governance within the Indian Constitution.