Article 277 Simplified: Savings

Official Text

Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.

Simple Meaning

Article 277 is a 'Financial Savings Clause.' It allows state governments and local municipalities to continue levying existing taxes, cesses, or fees that they were lawfully collecting before the Constitution took effect in 1950, even if those taxes were reallocated to the Union List. This savings mechanism prevents sudden revenue deficits until Parliament passes a law to the contrary.

Explain Like Ten

When India became a country in 1950, some town councils were already collecting local taxes. This rule said they could keep collecting them so they wouldn't run out of money, even if the new laws said only the central government could do it, until Parliament changed the rules.

Student Mode

Article 277 is a savings clause designed to maintain financial stability at the sub-national level post-republic. Any tax, duty, cess, or fee lawfully levied by a State or local authority immediately before the Constitution's commencement can continue to be levied, even if it falls under the Union List, until Parliament passes a law to the contrary.

Example

A municipal corporation that was collecting local transit duties on goods prior to 1950 was allowed to continue levying them under Article 277 to fund local municipal schools, even though transit duties were transferred to the Union List, until Parliament legislated otherwise.

Key Takeaway

Existing state and local taxes can continue to be levied temporarily even if their subjects are now in the Union List, until Parliament enacts a replacement.

FAQs

What is the purpose of the savings clause in Article 277?

To prevent sudden financial disruption for state and local governments by allowing them to maintain pre-existing tax collections until a federal legislative replacement is enacted.

Can a state increase a tax covered under Article 277?

No, states can only continue levying the existing tax at its pre-constitutional rate; any variation or expansion requires parliamentary authority.

Quiz

Under Article 277, who has the power to pass a law to stop the savings levy of a pre-existing local tax?

Answer: Parliament

What is the effect of Article 277 on local cesses levied before 1950 that fell into the Union List?

Answer: They continue to be lawfully levied until Parliament provides otherwise

Related Topics

• Article 372