Article 268 of the Indian Constitution deals with the collection and allocation of certain duties levied by the Union but collected and appropriated by the States. Specifically, it addresses stamp duties and duties of excise on medicinal and toilet preparations mentioned in the Union List. This article outlines the process of collection and the allocation of the proceeds generated from these duties, depending on whether they are leviable within Union territories or States, emphasizing the federal structure of India’s fiscal system.
What does Article 268 states ?
Duties levied by the Union but collected and appropriated by the States
(1) Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected
(a) in the case where such duties are leviable within any Union territory, by the Government of India, and
(b) in other cases, by the States within which such duties are respectively leviable
(2) The proceeds in any financial year of any such duty leviable within any State shall not form part of the Consolidated Fund of India, but shall be assigned to that State .
Article 268A Of The Indian Constitution
- Article 268A of the Indian Constitution pertains to the service tax levied by the Union, which is thereafter collected and allocated by both the Union and the States.
- The aforementioned article was incorporated into the Indian Constitution through the 88th amendment during the 54th year of the Republic of India.
- The aforementioned article is removed from the Constitution by the Constitution (One Hundred and First Amendment) Act of 2016.
Why Article 268A Was Removed?
- The allocation of money derived from the service tax, specifically listed in the first category of the seventh schedule, will be distributed in accordance with the provisions outlined in this article, which has been specifically formulated for this purpose. Given the absence of power for governments to levy a service tax. This article functions as a medium for disseminating information regarding this tax.
- The relevance of Article 268 has diminished in light of the state’s newfound authority to levy SGST on services used within the framework of the Goods and Services Tax (GST) system.
- As a result, the Constitution (One Hundred and First Amendment) Act of 2016 effectively nullifies the provisions outlined in article 268A.
Key aspects of Article 268
1. Stamp Duties: This article covers stamp duties that are mentioned in the Union List of the Constitution. Stamp duties are charges levied on various legal documents like agreements, property transactions, and financial instruments. The Union government has the authority to prescribe the rates and rules for these stamp duties.
2. Excise Duties on Medicinal and Toilet Preparations: Article 268 also includes duties of excise on medicinal and toilet preparations listed in the Union List. Excise duties are taxes on the production and manufacturing of goods. In this case, they apply to specific items related to medicines and toiletries.
3. Collection Mechanism: Depending on whether these duties are leviable within Union territories or States, the collection mechanism varies. If these duties are leviable within any Union territory, the Government of India is responsible for their collection. In other cases, where these duties apply within States, it’s the respective State governments that collect them.
4. Allocation of Proceeds: One crucial aspect of Article 268 is that the proceeds generated from these duties, when levied within a State, do not become part of the Consolidated Fund of India. Instead, they are assigned to that particular State. This means that the revenue generated from these specific duties benefits the State where they are collected, contributing to its finances.