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PART XII FINANCE, PROPERTY, CONTRACTS AND SUITS · CHAPTER I.— FINANCE · Miscellaneous Financial Provisions

Article 289: Exemption of property and income of a State from Union taxation

The Constitution of India

(1) The property and income of a State shall be exempt from Union taxation.

(2) Nothing in clause (1) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied for the purposes of such trade or business, or any income accruing or arising in connection therewith.

(3) Nothing in clause (2) shall apply to any trade or business, or to any class of trade or business, which Parliament may by law declare to be incidental to the ordinary functions of Government.

Questions on this article

2 questions in 4 of our papers cite Article 289. Try these from the free papers:

  1. 1. Assertion (A): Parliament may by law tax the income of a State arising from any trade carried on by the State Government, even a trade which Parliament has by law declared to be incidental to the ordinary functions of Government. Reason (R): Under Article 289(1), the property and income of a State are exempt from Union taxation.

  2. 2. Consider the following statements: 1. Under Article 285(1), the property of the Union is exempt from all taxes imposed by a State or by any authority within a State, save in so far as Parliament may by law otherwise provide. 2. Under Article 289(1), the property and income of a State are exempt from Union taxation. 3. Under Article 289(2), Parliament can never authorise a Union tax on income arising from a trade or business carried on by a State Government. Which of the statements given above is/are correct?

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