Part XII: Finance, Property, Contracts and Suits

Article 276: Taxes on Professions, Trades, Callings and Employments

Original Article:

(1) 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.

(2) 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.

(3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income accruing from or arising out of professions, trades, callings and employments.

Explanations:

Article 276 of the Constitution of India governs the taxation on professions, trades, callings, and employments, ensuring the balance between state powers and central taxation authority. It provides a framework that prevents excessive taxation while supporting revenue generation for local authorities.

Clause-by-Clause Explanation:

Clause (1): Validity of State Taxes

This clause allows states to impose taxes on professions, trades, callings, and employments, ensuring such laws are not invalidated on the grounds of encroaching on income tax, a central subject.

Clause (2): Limit on Tax Amount

Sets a maximum annual tax limit of two thousand and five hundred rupees per individual to prevent excessive taxation by states or local authorities.

Clause (3): Non-Limitation of Parliamentary Powers

This clause clarifies that state taxation on professions does not restrict Parliament's power to legislate on income tax derived from such professions.

Amendments:

The Constitution (Sixtieth Amendment) Act, 1988, increased the maximum tax limit from two hundred and fifty rupees to two thousand and five hundred rupees, reflecting inflation and changing economic needs.

Legislative History:

Initially presented as Draft Article 256, it was debated extensively on August 9, 1949, and incorporated into the Constitution as Article 276, ensuring local bodies had adequate revenue mechanisms without infringing upon central powers.

Debates and Deliberations:

• Dr. B.R. Ambedkar defended the need for professional taxes to support local governance without interfering in central revenue.
• Prof. Shibban Lal Saksena argued for raising the tax cap, highlighting the growing needs of local bodies for better public services.