Article 276 of Indian Constitution: Taxes on professions, trades, callings & employments

Article 276 of Indian Constitution allows state legislatures to levy taxes on professions, trades, callings, and employment, even if overlapping with income tax. It caps the annual tax per individual at Rs. 2,500 and clarifies that this power doesn't limit Parliament's ability to impose income taxes on the same sources. Both state and central governments can tax income separately, ensuring balanced revenue generation while respecting legislative jurisdictions within the Indian Constitution's framework. Explore other important Constitutional Articles.

Article 276 of Indian Constitution

Taxes on professions, trades, callings and employments

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.

Note: "The information on Article 276 of Indian Constitution provided above is referred from the official website of the Indian Code and is for reference only. Original laws and orders remain untouched.

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Article 276 of Indian Constitution deals with the states to tax professions, trades, and employment capped at 2500 rupees annually, ensuring federal balance. With hereby explained the Article 276 in points:

• Empowers State Legislatures: Article 276 grants authority to state legislatures to impose taxes on professions, trades, callings, and employment.
• Overlap with Income Tax: These state taxes can be levied even if they overlap with income tax imposed by the Union.
• Tax Limit: The maximum amount of tax payable by any individual under this provision is capped at Rs.2,500 per annum.
• No Impact on Parliament's Power: Article 276 of Indian Constitution ensures that state-imposed taxes do not limit Parliament's authority to tax income from these sources.
• Balanced Revenue System: It maintains a balance in taxation powers between the Union and states, allowing both to generate revenue for their respective needs.

Article 276 of Indian Constitution Significance

Article 276 of Indian Constitution under Part XII highlights the state independence by allowing taxation on professions, fostering revenue generation while maintaining federal harmony and fairness in significant points:

• Empowers State Revenue: Article 276 of Constitution of India allows states to levy taxes on professions, trades, callings and employments, promoting financial independence for development purposes.
• No Conflict with Income Tax: Article 276 of Indian Constitution secures state taxes that can concur with the Union Income tax and creates legislative harmony between state and central governments.
• Fairness in Taxation: This Article sets a limit of rupees 2500 per person annually and promotes equitable taxation policies in states. 
• Balances Federal System: Article 276 of Constitution of India prevents powers and allows states to generate revenue without encroaching on parliaments jurisdiction.
• Supports Local Development: Provides states with resources to fund initiatives for regional growth and public welfare.

The following are the Landmark Judgements on Article 276 of Indian Constitution that clarify tax limits, state powers, and federal balance, ensuring constitutional compliance and fairness. The cases are:

Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur (1970)

In Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur (1970), Supreme Court held that taxes exceeding the 2500 rupees limit under Article 276 of Indian Constitution were unconstitutional. Judgment of this case reinforced the constitutional cap on professional taxes that ensures fairness and compliance with legislative provisions. It clarified the scope of taxation powers that empower states for maintaining harmony between state and Union jurisdiction.

Karnataka Bank Ltd. v. State of Andhra Pradesh (2008)

In Karnataka Bank Ltd. v. State of Andhra Pradesh (2008), the Supreme Court validated taxing each branch of a company as a distinct "person" under the Andhra Pradesh Tax on Professions Act. It concluded this definition complied with Article 276 of Indian Constitution Clause (2), since the tax per branch did not exceed Rs.2,500 annually. The judgment upheld the state's authority to levy professional taxes, ensuring adherence to constitutional limits while clarifying taxation powers.

Kamta Prasad Aggarwal v. Executive Officer, Ballabgarh (1973)

The Supreme Court held that the authorities mentioned in Article 276 of Indian Constitution could independently lie professional taxes up to 250 rupees annually. Article 276 claims that the aggregate limit is applied distinguished to states and local authorities that ensure compliance between state and local taxation powers, and it also promotes fairness and compliance with legislative limits within India's taxation framework.

Conclusion

Article 276 of Indian Constitution ensures financial autonomy for states by allowing them to levy taxes on professions, trades, callings, and employments, capped at Rs. 2,500 per individual annually. It facilitates balanced taxation, allowing state-level taxes to coexist with Union income tax without legislative conflict. Additionally, it empowers both state and central governments to generate revenue independently, supporting development and public welfare. This provision underscores fairness and harmony in India's federal structure, promoting equitable resource distribution and adherence to constitutional limits.