Part XII: Finance, Property, Contracts and Suits

Article 272: Taxes Levied and Collected by the Union

Original Article:

This article has been omitted by the Constitution (Eighty-Eighth Amendment) Act, 2000.

Explanations:

Article 272 initially provided for certain taxes levied and collected by the Union to be shared with the States. However, it was omitted by the Constitution (Eighty-Eighth Amendment) Act, 2000, to simplify the tax-sharing model and strengthen cooperative federalism under Article 270.

Clause-by-Clause Explanation:

Clause (1): Union Authority to Levy Taxes

This clause allowed the Union to levy and collect specific taxes that could then be distributed among the States. The process ensured financial support for regional development projects.

Real-Life Example: During its operation, taxes such as additional duties on excise were distributed to help fund public welfare schemes in States.

Clause (2): Mechanism for Distribution

It provided for the percentage of proceeds to be determined by the Finance Commission. This ensured flexibility and alignment with evolving economic conditions.

Real-Life Example: The Finance Commission recommended varying shares based on population and fiscal capacity, ensuring equity among States.

Historical Significance:

The omission of Article 272 marked a shift towards a more integrated and efficient tax-sharing framework between the Union and States, eliminating ambiguities in revenue distribution and aligning with modern fiscal practices.

Real-Life Examples:

The omission allowed for uniform tax policies under Article 270, ensuring fair revenue sharing based on population and economic needs. This reform supported underdeveloped States by prioritizing equitable resource allocation.

Legislative History:

Article 272 was introduced as a mechanism for revenue sharing but was omitted in 2000 based on recommendations by the Tenth Finance Commission to streamline fiscal federalism.

Debates and Deliberations:

During the debates, members of the Constituent Assembly highlighted the need for an equitable tax-sharing framework. While Article 272 was initially favored for providing a flexible revenue-sharing option, evolving fiscal policies led to its omission to simplify and strengthen financial governance.