DMPQ- Write a short note on the Centre State Financial Relations.

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Indian Constitution has made elaborate provisions, relating to the distribution of the taxes as well as non-tax revenues and the power of borrowing, supplemented by provisions for grants-in-aid by the Union to the States.  Article 268 to 293 deals with the

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provisions of financial relations between Centre and States.

The Constitution divides the taxing powers between the Centre and the states as follows:

  • The Parliament has exclusive power to levy taxes on subjects enumerated in the Union List,
  • the state legislature has exclusive power to levy taxes on subjects enumerated in the State List,
  • both can levy taxes on the subjects enumerated in Concurrent List whereas residuary power of taxation lies with Parliament only.

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