Part XII - Finance & Property • Article

Article 271 Simplified: Surcharge on certain duties and taxes for purposes of the Union

Article 271 empowers Parliament to levy an extra charge (surcharge or cess) on top of central taxes. Uniquely, the entire proceeds of these surcharges go directly to the Central Government for its exclusive use and are not shared with the States.

Official Text

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 a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India.

Simple Meaning

Explain Like Ten

The central government is allowed to add an extra 'addon tax' (like a cess for schools or clean air) on top of regular taxes. But unlike regular taxes, they don't have to share any of this extra money with the states.

Student Mode

Article 271 provides an exception to the tax-sharing rule of Article 270. It empowers Parliament to levy surcharges on any tax or duty listed in Articles 269 and 270 (excluding GST) for the exclusive use of the Union. The entire proceeds of such surcharges are credited to the Consolidated Fund of India and do not form part of the divisible pool, a mechanism frequently criticized by states for reducing their share of total tax revenues.

Example

When the Union Government levies a 4% Health and Education Cess on income tax, this cess money is kept entirely by the Center under Article 271 and is not added to the divisible pool shared with the states.

Key Takeaway

Surcharges and cesses (except on GST) are kept entirely by the Union and excluded from the divisible pool.

FAQs

Why is GST excluded from the surcharge power under Article 271?

Because GST is a concurrent tax governed by the GST Council. Allowing the Union to unilaterally levy surcharges on GST would undermine the cooperative tax structure.

What is the difference between a surcharge and a cess under Article 271?

A surcharge is a tax on tax meant for general Union expenditure, whereas a cess is a tax on tax levied for a specific purpose (e.g., Krishi Kalyan Cess, Swachh Bharat Cess).

Quiz

Under Article 271, who gets the proceeds of any surcharge levied by Parliament?

Answer: The Union Government exclusively

Which tax is explicitly exempted from the Union's surcharge power under Article 271?

Answer: Goods and Services Tax (GST)