Article 271 of the Costitution of India with Case law
Article 271 of the Constitution of India
Title: Surcharge on certain duties and taxes for purposes of the Union
Bare Text of Article 271 (Simplified):
"Notwithstanding anything in Articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in those Articles (except the goods and services tax under Article 246A) by surcharge for the purposes of the Union, and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India."
Key Elements of Article 271:
| Element | Description |
|---|---|
| Surcharge | An additional charge on certain Central taxes/duties. |
| Power given to | Parliament only. |
| Purpose | For the exclusive use of the Union (Central Government). |
| Not applicable to | GST (as per 101st Amendment Act, 2016). |
| Proceeds go to | Consolidated Fund of India; not shared with States. |
Taxes on which Surcharge can be Levied:
Article 271 allows surcharge on:
Income tax
Customs duties
Excise duties
⚠️ Not on GST, as clarified post-2016 constitutional amendments.
Why It Matters:
Surcharge is a tool for the Union Government to raise extra revenue without sharing it with States.
It helps fund national-level schemes, defence, disaster relief, or other urgent Union needs.
This provision affects Centre-State fiscal relations.
Important Case Laws on Article 271:
🧑⚖️ 1. Krishna Kumar v. Union of India, AIR 1990 SC 1782
Issue: Whether surcharge levied under Article 271 has to be shared with the States.
Held:
No. The surcharge under Article 271 is not shareable with States.
The entire amount goes to the Consolidated Fund of India.
🧑⚖️ **2. Union of India v. H.S. Dhillon, (1972) 2 SCC 33
Observation:
The Court upheld the plenary taxing power of Parliament and clarified that Article 271 allows it to increase taxes unilaterally via surcharge.
🧑⚖️ **3. State of Rajasthan v. Union of India, (1977) 3 SCC 592
Relevance:
While primarily about federalism, the case reiterated the Centre’s financial dominance, partly due to powers like Article 271.
🧑⚖️ **4. Commissioner of Income Tax v. K Srinivasan, AIR 1972 SC 2595
Held:
Surcharge is a part of income tax for calculation purposes, and it adds to the tax liability of the assessee.
However, revenue collected from surcharge goes exclusively to the Centre.
Example of Practical Application:
In Union Budgets, surcharge is often imposed on high-income individuals or companies.
Example: A surcharge of 10% on income above ₹50 lakh, or 15% or more above ₹1 crore.
Impact on States:
| Positive | Negative |
|---|---|
| Allows Union to raise funds for emergencies or national schemes | States lose share in this portion of revenue |
| Simpler than raising base tax rates | Affects fiscal federalism and financial autonomy of States |
Conclusion:
Article 271 gives Parliament the power to impose a surcharge on certain Central taxes for Union purposes only. This provision has played a critical role in Union revenue generation, especially in times of fiscal need, but also raises concerns in the context of Centre-State financial balance.
✅ Key takeaway: Surcharge = Extra tax for Union, not shared with States.
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