Part XII - Finance & Property • Article

Article 285 Simplified: Exemption of property of the Union from State taxation

Article 285 exempts all property owned by the Central Government (Union) from any taxes imposed by a State government or local municipal authority (like property tax), unless Parliament passes a law allowing it. However, local taxes that were already being collected on Union property before 1950 can continue until Parliament says otherwise.

Official Text

(1) The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. (2) Nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.

Simple Meaning

Explain Like Ten

The buildings and land owned by the central government (like post offices or railways) do not have to pay tax to the state or city governments. It's a rule to stop different levels of government from taxing each other.

Student Mode

Article 285 establishes the doctrine of intergovernmental tax immunity regarding Union property. Clause (1) exempts all Union property from taxes imposed by a State or any local authority (municipalities, district boards) within a State, unless Parliament provides otherwise. Clause (2) contains a saving provision allowing pre-constitutional local levies to continue until Parliament legislates to the contrary.

Example

A municipal corporation cannot charge property tax on a Central Government building, such as a Post Office or an Income Tax department office. However, if a municipality was taxing railway land before the Constitution commenced in 1950, it can keep collecting that tax until Parliament changes the rule.

Key Takeaway

Central Government properties are immune from State and local taxes, unless Parliament explicitly permits it.

FAQs

Can a city municipality tax central railways property?

No. Properties owned by the Union, including railways, are exempt from local municipal taxes under Article 285(1), unless a federal law permits it.

Does the exemption apply to properties owned by government corporations (like LIC or SBI)?

No, the exemption only applies to property owned directly by the Union government itself. Public sector undertakings or corporations have separate legal identities and are not exempt.

Quiz

Under Article 285, whose property is exempt from state and local taxation?

Answer: The Union Government

Can a State levy tax on Union property if it was doing so before the commencement of the Constitution?

Answer: Yes, it can continue until Parliament by law provides otherwise