📜 Article 268 of the Indian Constitution
Title: Duties levied by the Union but collected and appropriated by the States
🔹 Full Text (Simplified):
Article 268 provides for certain Union duties (taxes) that are:
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Levied (imposed) by the Central Government,
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But collected and kept by the State Governments.
✅ Key Provisions of Article 268:
| Feature | Details |
|---|---|
| 🏛️ Levying Authority | Union Government (Parliament) |
| 🧾 Collecting Authority | State Governments |
| 💰 Appropriation (Revenue kept by) | States (in which the tax is collected) |
| 📜 Mentioned Duties | - Stamp duties (on documents like bills of exchange, cheques, etc.) - Excise duties on medicinal and toilet preparations containing alcohol or narcotics |
| 🗒️ Schedule Reference | Duties listed in Union List (List I), Entry 84 of the Seventh Schedule |
🔄 Why This Dual Structure?
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It allows the Central Government to maintain uniformity in taxation, while giving the revenue to the States.
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Helps States generate income from Union-imposed taxes.
⚖️ Example:
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Suppose a manufacturer produces a medicinal preparation with alcohol in Madhya Pradesh.
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The excise duty is levied by the Union, but collected by the Madhya Pradesh Government and retained by the State.
📌 Important for Exams:
| Point | Detail |
|---|---|
| Which body levies? | Union |
| Who collects and keeps it? | State |
| Type of taxes? | Stamp duties & excise on medicinal/toilet preparations |
| Constitutional Article? | Article 268 |
| Purpose? | Balance between central control and state benefit |
Here is a clear and concise chart of Articles 268 to 270 of the Indian Constitution — important for understanding the distribution of taxes between the Union and States:
📊 Chart: Articles 268 to 270 – Distribution of Revenues
| Article | Title | Key Points / Summary |
|---|---|---|
| 268 | Duties levied by Union but collected by States | - Stamp duties and excise on medicinal/toilet preparations. - Levied by Centre, collected & kept by States. |
| 268A (Repealed) | Service Tax shared between Union and States (Now repealed) | - Added by 88th Amendment (2003), removed after GST introduction (101st Amendment, 2016). |
| 269 | Taxes levied and collected by Union but assigned to States | - Covers inter-State trade or commerce taxes. - Entire revenue assigned to States. |
| 269A | GST on inter-State trade or commerce | - GST on inter-State supplies (IGST) levied and collected by Union. - Shared between Union and States as per law. |
| 270 | Taxes levied and collected by Union and distributed between Union and States | - Includes all other Union taxes (like Income Tax). - Distribution as per Finance Commission's recommendation. |
🧠 Summary Table of Tax Flow Between Union and States
| Type of Tax | Levied by | Collected by | Revenue Goes To |
|---|---|---|---|
| Stamp duties & excise (toilet/medicinal) | Union | States | States |
| Inter-State Trade Tax (before GST) | Union | Union | States |
| IGST (inter-State GST) | Union | Union | Union + States |
| Income Tax & others | Union | Union | Shared (per Article 270) |
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