A Comparative View of Taxing Power

Author :- Tatsat Bhatt


The Power of Taxation under The Indian Constitution springs from the provision contained in Article 246 and certain entries in the Union and State Lists of the Seventh Schedule to the Constitution. The division of the taxation power between the Union Legislature and the state legislatures by way of enumeration in these two lists has avoided almost wholly, conflicts in this area. There is no concurrent field of taxation, and the residuary power of taxation vests in Parliament.

The Union and State Lists of the Seventh Schedule also keep a clear-cut distinction between general legislative entries and entries relating to taxation. In the Union List, entries 82 to 92 A and in the State List entries 45 to 63 deal with taxation. Hence the power to tax should be derived from a specific tax entry.

Source of Taxing Power

What separates participation of the State from that of other associations is its mandatory nature and the way that every single other association and activities inside the wildernesses of the State are, in the last resort, subordinate to it. The modern State is a regional society, isolated into Government and subjects, asserting inside its distributed physical territory, incomparability over every other foundation. Sovereignty is, the most significant constituent component of the State and there can be no State without a Sovereign force.

Taxation is legal capacity of the sovereignty or one of its governmental agents to correct or force a charge upon people or their property for the aid of government and for the installment for whatever other public purposes which it might intrinsically do. The influence of taxation varies from the influence of eminent domain, for under taxation the administration is required to make and implement commitment of money or property by the resident as his share of the tax of support of the government. Property taken under eminent domain is much beyond the owner’s share of the burden of government. Eminent domain takes nit a share of the public tax, yet in excess of an offer.

A legislature can’t exist without collecting and spending money. Parliament controls public account which incorporates giving of money to the organization for costs on public administrations, burden of taxes and approval of credits. This is a significant capacity of Parliament. Through this implies Parliament practice authority over the official on the grounds that at whatever point Parliament talks about budgetary issues, government’s expansive arrangements are constantly brought into center.

Then again, in exercise of taxing power presented by exercise of a legislative entry, the Legislature can’t provide the following, which can’t be supposed to be ‘ancillary’ to the legislative power being referred to:

(1) That any money gathered by an individual by an off-base use of taxing law would in any case be recoverable by the State as though it were a duty forced under its real powers, despite the fact that the Legislature may punish such illicit assortment.

(2) The outcome would be the equivalent if the law required the seller who has recuperated an unlawful whole which was not recoverable under the tax law to store it with the State so the State may discount to the individual from whom the cash had been illicitly recouped, in light of the fact that the necessity of store with the State is an activity of the burdening control over a subject which was outside that power.

Taxing Power in Other Federations

In the Federations of the USA, Canada and Australia, no elaborate distribution of taxing powers has been attempted. The general pattern is that the Central Government in each country is authorized, subject to some restrictions, to levy any tax. On the other hand, powers of the constituent units are somewhat restricted. In USA, states can levy any tax except duties of imports and exports. Whereas in Canada, the Provinces are debarred from levying an Indirect Tax. In Australia, states cannot levy duties of customs and excises.

In USA, Canada and Australia, there is no rigid separation of taxing powers between the Centre and States and both may levy many similar taxes on the same tax base. This has given rise to many acute problems of overlapping and multiple taxation in these countries. Overlapping taxation arises when Central and State taxes operate simultaneously in the same tax base. Multiple taxation arises when several States levy similar taxes on one and the same tax base. The former is result of vertical competition among the several taxing States. Accordingly, in the three Federations, in the areas of income-tax and succession duties, both the Centre and States operate simultaneously creating problems of overlapping taxation so that a person has to pay a Central as well as a State Tax on the same income or the Property.

Further, many States can simultaneously levy these taxes on the same base on the ground of nexus. For example, a resident of Connecticut (USA) conducts business in New York. The New York State can tax his income because it originates there, the State of Connecticut can tax the same income because the recipient resides there. Such problems make tax administration costly and inconvenient for the taxpayers and many legal issues arise constantly. In fact, the situation was so complicated in Australia and Canada that during the period of the Second World War, income tax and estate duty were centralized, and the regional governments were compensated with grants.


While comparing the Taxing Power in India and other Countries, it seems very evident that India offers a well-structured tax system for its population. Taxes are the largest source of income for the government. This money is deployed for various purposes and projects for the development of the nation that improves the life quality of every person. Looking upon the Article 246, it also justifies the Constitutionality since Tax collection is essential for a smooth functioning and growth of the nation. Considering it to be a Duty and a responsibility, all Citizens must encourage to pay taxes without any Unlawful evasions.

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