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(Sample Material) IAS Online Coaching : Polity - Seventh Schedule and Taxation Powers

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Subject: Polity

Topic: Seventh Schedule and Taxation Powers

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The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Centre and the State. An important restriction on this power is Article 265 of the Constitution which states that “No tax shall be levied or collected except by the authority of law.” Therefore each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature.

Article 246 of the Indian Constitution, distributes legislative powers including taxation, between the Parliament and the State Legislature. Schedule VII (based on Art.246) enumerates these subject matters. Separate heads of taxation are provided under lists I and II . There is no head of taxation in the concurrent List (Union and the States have no concurrent power of taxation). The list of fourteen Union heads of taxation and the list of nineteen State heads are given below:

Parliament

Taxes on income other than agricultural income (List I, Entry 82)
Duties of customs including export duties (List 1, Entry 83)
Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other nareotic drugs and nareotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I, Entry 84)
Corporation Tax (List I, Entry 85)
Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I, Entry 86)
Estate duty in respect of property other than agricultural land (List I, Entry 87)
Duties in respect of succession to property other than agricultural land (List I, Entry 88)
Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I, Entry 89)
Taxes other than stamp duties on transactions in stock exchanges and futures markets (List I, Entry- 90).
Taxes on the sale or purchase of newspapers and on advertisements published therein (List I, Entry 92)
Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce (List 1 Entry 92A)
92 C- power to levy service tax
Taxes on the consignment of goods in the course of inter-State trade or commerce (List I, Entry 93A)
All residuary types of taxes not listed in any of the three lists (List 1, Entry 97)

State Legislature

Land revenue, including the assessment and collection of revenue, the maintenance of the Land records, survey for revenue purposes and records of rights, and alienation of revenues (List II, Entry 45)
Taxes on agricultural income (List II, Entry 46)
Duties in respect of succession to agricultural income (List II, Entry 47)
Estate Duty in respect of agricultural income (List II, Entry 48)
Taxes on lands and buildings (List II, Entry 49)
Taxes on mineral rights (List II, Entry 50) Duties of excise for following goods manufactured or produced within the State
Alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and nareotics (List II, Entry 51)
Taxes on entry of goods into a local area for consumption, use or sale therein (List II, Entry 52)
Taxes on the consumption or sale of electricity (List II, Entry 53)
Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54)
Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55)