Part XII - Finance • Article

Article 266 Simplified: Consolidated Funds and public accounts of India and of the States

Article 266 creates the 'Consolidated Fund.' Think of this as the main bank account of the entire country. Every rupee of tax you pay (Income Tax, GST, etc.) goes into this account. The government cannot take even one rupee out of this account without asking Parliament for permission. It ensures total transparency in how India's wealth is stored.

Official Text

(1) Subject to the provisions of article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of India”, and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled “the Consolidated Fund of the State”. (2) All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited to the public account of India or the public account of the State, as the case may be. (3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution.

Simple Meaning

Explain Like Ten

This is where all the tax money goes. The government cannot spend it without asking the Parliament for permission.

Student Mode

Establishes the Consolidated Fund of India and the States. All government revenues flow into this fund.

Example

Every time the government wants to build a new highway, they must show the plan to Parliament to get the money released from this Consolidated Fund.

Key Takeaway

All national tax money goes into one secure account that Parliament controls.

FAQs

How is money taken out of this fund?

Through an Appropriation Act passed by Parliament after the Budget debate.

Do states have their own Consolidated Fund?

Yes, every state has its own Consolidated Fund under Article 266.

What is the 'Public Account'?

It is for money that doesn't belong to the government (like PF) but is kept by them; it doesn't need a vote for withdrawal.

Who audits the Consolidated Fund?

The CAG (Comptroller and Auditor-General).

Quiz

Where does tax money go?

Answer: Consolidated Fund

Who controls the Consolidated Fund?

Answer: Parliament

Can a state spend its fund without its Assembly?

Answer: No

Withdrawal from CF requires what?

Answer: A Law