Article 276 of the Costitution of India with Case law
🔷 Article 276 of the Constitution of India: Taxes on Professions, Trades, Callings and Employments
📜 Text of Article 276:
(1) Notwithstanding anything in Article 246, no law of the Legislature of a State relating to taxes for the benefit of the State or of a municipality, district board, local board, or other local authority in respect of professions, trades, callings, or employments shall be invalid on the ground that it relates to a tax on income.
(2) The total amount payable in respect of any one person to the State or to any one municipality, district board, local board, or other local authority by way of taxes on professions, trades, callings, and employments shall not exceed ₹2,500 per annum.
(3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings, and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income.
🧾 Explanation:
Article 276 allows States and local bodies to levy a tax on professions, trades, and employments, even though these may appear similar to income taxes, which are normally under Parliament’s domain (List I, Entry 82).
It overrides Article 246 to this extent.
There is a maximum cap of ₹2,500 per person per year (which can be raised by Parliament by law).
Parliament retains exclusive power to levy income tax, unaffected by this article.
⚖️ Important Case Laws on Article 276:
1. Krishna Chandra v. Union of India, AIR 1956 Cal 11
The Calcutta High Court upheld the validity of profession tax, ruling that Article 276(1) allows such taxation irrespective of income tax laws.
2. State of Kerala v. Gwalior Rayon Silk Manufacturing Co., AIR 1973 SC 2734
Supreme Court held that a profession tax is a compensatory tax, not a tax on income.
The Court clarified that Article 276 gives a separate field of taxation to the states.
3. Mukundarayapuram Taluk Merchants Association v. State of Tamil Nadu, (1985) 1 SCC 51
Upheld the validity of profession tax imposed by Tamil Nadu government.
Reiterated the ₹2,500 per annum ceiling and the non-interference with income tax.
4. All India Bank Officers’ Confederation v. Union of India, (1989) 4 SCC 90
Challenged the levy of profession tax on salaried employees.
The Supreme Court upheld the tax and confirmed State’s power to impose it, subject to the cap.
💰 Profession Tax in Practice (Today):
| State | Applies to | Remarks |
|---|---|---|
| Maharashtra | Employees, professionals, traders | One of the most structured systems |
| Karnataka | Based on monthly income slabs | Employers deduct and remit |
| Tamil Nadu | Based on half-yearly slabs | Different rates for different classes |
| West Bengal | Applicable to individuals earning above a threshold | Profession Tax Act, 1979 |
📌 Key Points Summary:
| Feature | Description |
|---|---|
| Tax Type | Profession, trade, calling, or employment |
| Levied by | States, municipalities, local bodies |
| Max Limit | ₹2,500 per person per year (can be raised by Parliament) |
| Not Income Tax | Distinct from income tax under Union List |
| Constitutional Protection | Allowed even if it overlaps with income characteristics |
🗂️ Related Articles:
| Article | Subject |
|---|---|
| Article 245 | Extent of laws made by Parliament and States |
| Article 246 | Distribution of legislative powers |
| Article 265 | No tax except by authority of law |
| Entry 60, 61, 63 of State List | Professions-related State taxation |
✅ Example:
A salaried employee in Maharashtra earning over ₹10,000/month pays ₹200/month (₹2,400/year) as Profession Tax, deducted by the employer and remitted to the State — this is constitutional under Article 276.
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